Dar Al Arkan Real Estate Development Company (4300) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue increased 16% YoY and 11% QoQ, driven by development property sales, Buraidah Hills project, and Compass Group consolidation; six-month revenue reached SR 1.83 billion, up 15% YoY, with net profit at SR 318.7 million, a 21% increase.

• Gross profit rose 22% YoY and 8% QoQ, with gross margin improving to 40.5% for the six months, up from 38.8% last year.

• EBITDA increased 22% YoY and 2% QoQ, maintaining a margin above 40%.

• Earnings per share for the six-month period increased to SR 0.30 from SR 0.24 YoY.

• Strong liquidity position with SAR 5.5 billion in cash at Q2 2024, sufficient to cover operating expenses and debt maturities for the next two years.

Financial highlights

• Q2 2024 revenue: SAR 961.6 million (Q2 2023: SAR 826.2 million); Q2 2024 net income: SAR 165.1 million (Q2 2023: SAR 146.5 million); net margin: 17.2%.

• LTM EBITDA: SAR 1,575 million, up 30.4% YoY.

• Book value per share increased to SAR 19.1 (Q2 2023: SAR 18.4).

• Total assets grew to SR 34.8 billion as of 30 June 2024, up from SR 33.7 billion at year-end 2023.

• Shareholders’ equity increased to SR 20.58 billion, reflecting retained earnings growth and acquisition activity.

Outlook and guidance

• Non-oil GDP in Saudi Arabia is forecasted to grow over 5% in the medium term, with strong demographic trends and government support underpinning real estate demand.

• Management notes a signed contract for a major project valued at SR 6.7 billion, pending regulatory approval.

• Internal valuation indicates a 20% average uplift in development property values, with continued focus on project execution.

• The company plans to continue opportunistic investments in development properties, supported by robust cash flows.

• Fiscal policy aims to maintain government reserves at safe levels, supporting macroeconomic stability.