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Puvanya
Puvanya
Oct 06 2026
29Access Engineering PLC (AEL) could find itself with the funds to take on new projects or raise its dividend payout in the coming years, as its Marina Square condominium development in Colombo is expected to generate a cash flow windfall from the sale of its remaining apartments, HNB Stockbrokers said in a research note.
“In the longer term, monetizing of the condominium project will provide AEL with significant optionality for either raising dividend payout or to reinvest in new projects,” the brokerage noted.
Marina Square Uptown Colombo, which is developed through the group’s fully owned subsidiary Harbour Village (Private) Limited, comprises 1,088 apartments across five towers along the Colombo harbour front, together with commercial space, making it one of the largest condominium developments undertaken in the country. The project reached substantial completion by end-March 2026, with handovers to buyers having commenced during the last financial year.
The brokerage expects the bulk of the cash to flow beyond the 2027/28 financial year, given that the apartments being handed over at present were largely sold off-plan and prepaid, and therefore bring in only modest incremental cash despite the substantial revenue being recognised this year.
“Incremental cash flow from the project is expected to increase substantially in the later years as the unsold inventory is monetized,” the note stated.
Marina Square contributed Rs.2.57 billion in revenue and Rs.0.9 billion in operating profit in the three months ended June 30, 2026, which the brokerage described as the project’s first material quarter of handovers, accounting for nearly half of the increase in the group’s operating profit.
HNB Stockbrokers pointed out that the project is structurally high-margin, as the bulk of its construction costs were incurred before the economic crisis while the remaining units are now being sold at post-crisis prices. The segment’s operating margin stood at 33.8 percent in the quarter and, with the project enjoying a 10-year tax holiday, its net margin reached 31 percent.
The brokerage raised its condominium revenue forecast for the current financial year to Rs.24.9 billion from Rs.17.1 billion, with 30 percent of the units expected to be sold this year and a further 25 percent in the following year. The segment alone is projected to add Rs.7.6 billion to the group’s operating profit, which is forecast to rise to Rs.19.1 billion from Rs.14.2 billion.
At group level, revenue is projected to grow 58.4 percent to Rs.78.7 billion in the year ending March 2027, while net profit is forecast to reach Rs.12.7 billion, up from Rs.7.75 billion in 2025/26. Earnings per share are expected to climb 72 percent to Rs.12.33.
Meanwhile, the group already has a sizeable pipeline of work in hand, with its order book standing at Rs.62.9 billion as at June 2026, up 21 percent from Rs.52 billion in March 2025. The Rs.18.7 billion package it secured in May on the Rambukkana-Galagedara stretch of the Central Expressway accounts for 30 percent of the total.
At 4.7 times the civil engineering segment’s trailing 12-month revenue, “the existing order book alone is sufficient to sustain activity for nearly five years at the current revenue run rate,” the brokerage observed.
It expects order book conversion and new order intake to quicken as the government accelerates capital spending, given that only 17 percent of the capex budget had been utilised by June 2026. The 2027 appropriation bill allocates Rs.1.7 trillion for capital expenditure, an increase of about 23 percent from the 2026 allocation.
The automobile segment, which saw its revenue jump 256 percent to Rs.8.1 billion in the June quarter, now accounts for roughly 49 percent of group revenue, up from 29 percent a year earlier. Isuzu commercial vehicle volumes rebounded in July and August after a weak quarter, and the brokerage expects full-year automobile revenue to grow 5.3 percent to about Rs.26 billion.
