Avanceon Limited (AVN) reported a net profit of PKR 2.07 billion (EPS: PKR 5.13) in CY24, reflecting a 21% decline from PKR 2.61 billion (EPS: PKR 5.99) in CY23. The contraction in profitability was primarily attributed to exchange losses incurred during the year. The company did not declare any dividends as profits were retained to support reinvestment and future expansion. AVN secured a record-high order book of PKR 21 billion for CY25, the largest in its history, with management anticipating that approximately 70% of these orders will be recognized within CY24.
The company is progressively transitioning toward direct engagement with end users, now contributing over 60% of the Middle East revenue stream. The decline in order intake during the third and fourth quarters of CY24 was linked to regional conflicts in the Middle East.
Operationally, the company executed more than 650,000 man-hours and employs over 350 professionals. AVN maintains partnerships with more than 15 international entities and serves a client base of over 3,200 medium to large enterprises globally. Following its joint venture agreement with Zamil Industrial, the company has identified the Kingdom of Saudi Arabia as the principal driver of growth over the next five years and intends to pursue an aggressive expansion strategy in that market over the next 6 to 8 months.
The company is registered with the Pakistan Software Export Board and benefits from a preferential tax regime of 0.25% on export revenue from engineering services. In 4QCY25, tax savings and reversals are anticipated following a change in taxation policy, whereby the tax incidence on imported equipment will be based on the purchase cost rather than revenue generated. AVN expects further benefits under this regime going forward. Geographical and vertical diversification serve as the company’s primary hedging strategy, with approximately 75% to 80% of revenue sourced internationally and denominated in US dollars. The company is also focusing on developing a recurring revenue base, projecting recurring revenue of USD 2.5 million in CY25, rising to USD 5 million in CY26 and USD 7.5 million in CY27.
While oil and gas now contribute only 20% to overall business, the company remains focused on infrastructure development. With oil prices remaining low, the share of renewables in the energy mix stands at 6% to 8%. AVN’s Dubai Process Division is expected to generate revenue of USD 20 million in CY25, while in KSA, the company is pursuing Aramco certification by the end of the year to position itself for significant investment opportunities tied to Aramco. In terms of infrastructure, AVN has acquired a 7-kanal site in Lahore for PKR 2 billion. Management expects to recover the investment within five years, primarily through tax incentives. Looking ahead, AVN aims to expand its geographic footprint in both the Middle East and Southeast Asia, with a strategic focus on water, wastewater, and oil and gas verticals.
The company is also shifting more of its cost base to Pakistan to enhance operational efficiency. Management projects revenue of PKR 20.8 billion and profit after tax of PKR 2.8 billion for CY25, assuming exchange rate stability. For CY26, the company expects revenue to reach PKR 25 billion with profit after tax of PKR 3.5 billion, and for CY27, projected revenue stands at PKR 30 billion with profit after tax of PKR 4.5 billion. In CY25, the company has identified spike projects worth USD 180 million, including USD 57 million from Saudi Arabia, USD 32 million from Qatar, USD 69 million from the UAE, and USD 22 million from Pakistan. Management also plans to pursue a small-cap international IPO and confirmed that all future business in Saudi Arabia will be executed through its joint venture with Zamil.
Important Disclosures
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