Dar Al Arkan Real Estate Development Company (4300) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue increased 28% YoY to SAR 918.7 million, with gross profit up 44% YoY and gross margin improving by 5 percentage points, though revenues declined 4% sequentially from Q2 2024.

• For the nine months ended 30 September 2024, revenue reached SR 2.75 billion and gross profit SR 1.15 billion, both up year-over-year.

• Net income for Q3 2024 was SAR 134.7 million (down 13.6% YoY), while nine-month net profit was SR 453 million, with EPS at SR 0.42.

• The group completed the acquisition of Compass Project Investments SPV, increasing ownership to 90% and consolidating its results.

• The company maintains a robust balance sheet with SAR 5.2–5.25 billion in cash and SAR 10.6–10.55 billion in gross debt, supporting liquidity for operations and debt maturities.

Financial highlights

• Q3 2024 revenue: SAR 918.7 million (up 28% YoY, down 4% QoQ); nine-month revenue: SR 2.75 billion.

• Gross profit: SAR 412.1 million in Q3 (up 44% YoY, up 7% QoQ); nine-month gross profit: SR 1.15 billion; gross margin: 44.9% in Q3, 42% for nine months.

• EBITDA: SAR 366.5 million in Q3 (down 2% YoY, down 8% QoQ); EBITDA margin: 39.9%.

• Net income: SAR 134.7 million in Q3 (down 13.6% YoY); nine-month net profit: SR 453 million; net margin: 14.7%.

• Book value per share increased to SAR 19.2 from SAR 18.6 YoY; EPS for nine months was SR 0.42.

Outlook and guidance

• Non-oil GDP in Saudi Arabia is forecasted to grow over 5% in the medium term, with real estate demand expected to exceed 4 million units over the next decade.

• Revenue recognition for Shams Ar Riyadh is expected to resume in Q4 2024 following regulatory approvals.

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

• Management expects continued stabilization in real estate transaction volumes and is using conservative internal valuation assumptions.

• The company plans to continue opportunistic investments in development properties, supported by strong liquidity.