[RAM] RAM Ratings affirms Avaland's AA3/Stable/P1 ratings

RAM Ratings has affirmed Avaland Berhad’s (the Company) AA₃/Stable/P1 corporate credit ratings and the AA₃/Stable rating of its RM1 bil Sukuk Murabahah Programme.

The affirmation reflects Avaland’s healthy financial profile as well as its stronger position in the Klang Valley residential property market, supported by proven execution track record, healthy unbilled sales and a sizeable development pipeline. These strengths are moderated by its smaller scale relative to larger and more diversified peers and the execution risks associated with landbank replenishment.

The ratings also incorporate parental support uplift, reflecting our view of a ‘high’ likelihood that Avaland would receive timely extraordinary financial support from its parent, Ayala Land Inc (Ayala Land or the Group), if required. While Avaland’s contribution to the Group’s earnings remains modest, it serves as Ayala Land’s sole property development platform outside the Philippines, underscoring its strategic importance within the wider Ayala group, one of the Philippines' largest conglomerates.

As at end-June 2026, Avaland’s unbilled sales stood at RM940 mil, providing good near-term earnings visibility. The Company had seven ongoing projects with a combined gross development value of RM2.9 bil, with project take-up rates ranging from 39% to 100%. While sale conversion for certain affordable projects has been slower amid softer sentiment among mass-market buyers, demand for its mid-market, upper-mid-market and premium offerings has remained relatively resilient. Avaland plans to launch RM2.3 bil worth of new developments in 2H 2026 and 2027, with greater focus on these higher-value segments.

Avaland registered stronger y-o-y revenue and operating profit before depreciation, interest and tax (OPBDIT) in 1H FY Dec 2026. The temporary softer performance in FY Dec 2025 and 1Q FY Dec 2026 mainly reflected the completion of earlier projects and the ramp-up of newer developments. Profitability stayed supported by healthy OPBDIT margins over the period (FY Dec 2025: 17.8% and 1H FY Dec 2026: 20.3%).

We expect earnings to recover from FY Dec 2026 onwards as construction progresses across ongoing projects and revenue recognition increases. Gearing is projected to ease towards 0.60 times by end-2027 from 0.75 times at end-June 2026, following debt repayments and the planned full settlement of advances due to Ayala Land. Funds from operations debt coverage is expected to remain broadly stable at around 0.15 times over the next two years.


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Hani Hamizah Nor Hashim
(603) 2708 8240
hani@ram.com.my

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