Digital Media And PropTech Will Shape Future Markets

Key Takeaways

• Rapid digital innovation and diversification into digital media are driving higher engagement, new revenue streams, and improved financial performance across the portfolio.
  
• Strong operational efficiency and ESG initiatives enhance portfolio competitiveness, cost structure, and appeal to tenants and investors, supporting sustainable long-term growth.
  
• Exposure to interest rate risk, uncertain new revenue streams, structural retail headwinds, and limited future margin improvements could constrain long-term growth and profitability.

Catalysts

Provides planning, development, administration, and sales services to third-party shopping centers in Brazil.

• Allos' rapid rollout of its digital benefits app and loyalty program across an expanding mall portfolio is driving tenant and consumer engagement, supporting higher occupancy rates, enhanced tenant retention, and increasing potential for incremental revenue streams via data-driven promotions and targeted advertising. This is expected to positively impact both revenue and net margin.
  
• The company's strategic entry into the high-growth out-of-home digital media space (via helloo and long-term airport contracts) positions Allos to benefit from advertisers' shift toward digital and location-based marketing, creating a new, recurring high-margin revenue stream with upside visibility as operations scale over the next several years.
  
• Sustained strong same-store sales growth and consistent occupancy rates above 96% demonstrate the company's ability to leverage urbanization and evolving consumer behavioral trends, enabling continued rental growth, pricing power, and resistance to macro headwinds-improving both top-line revenue and earnings stability.
  
• Broad-based technology adoption-including advanced property management systems and PropTech integration-is delivering operational efficiencies (as evidenced by declining operational costs and G&A), which should structurally lower the company's cost base and lift EBITDA/net margins over time.
  
• Commitment to sustainability, ESG programs, and energy-efficient retrofits is enhancing Allos' appeal to institutional tenants and investors, increasing portfolio competitiveness, lowering tenant risk, and potentially translating to reduced financing costs and stronger long-term net earnings.

Allos Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Allos's revenue will grow by 2.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 25.6% today to 33.8% in 3 years time.
• Analysts expect earnings to reach R$1.0 billion (and earnings per share of R$1.81) by about August 2028, up from R$737.4 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.2x on those 2028 earnings, up from 15.4x today. This future PE is greater than the current PE for the BR Real Estate industry at 6.8x.
• Analysts expect the number of shares outstanding to decline by 4.96% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 22.55%, as per the Simply Wall St company report.

Allos Future Earnings Per Share Growth

Risks

• Allos' high concentration of debt indexed to the CDI exposes it to refinancing and interest rate risk; a sustained period of elevated rates in Brazil could materially increase financial expenses and compress net margins.
  
• The company's media and airport advertising segment (helloo) is at an early stage of ramp-up, and its long-term contribution to revenue remains unproven; delays or underperformance in this new revenue stream could limit diversification and pressure top-line growth.
  
• While current occupancy rates and rental spreads are strong, secular shifts toward e-commerce and changes in consumer behavior could structurally reduce long-term demand for brick-and-mortar retail, negatively impacting long-term revenues and occupancy.
  
• Allos acknowledges that its growth in operational efficiency and cost reductions may normalize, making it harder to drive further margin improvements in the future, potentially limiting long-term profitability and earnings growth.
  
• The company is being cautious with M&A and expansions due to uncertainties in macroeconomic and interest rate environments; failure to execute value-accretive acquisitions or expansions could limit future growth opportunities and revenue scalability.

Valuation

• The analysts have a consensus price target of R$28.038 for Allos based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of R$33.5, and the most bearish reporting a price target of just R$22.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be R$3.1 billion, earnings will come to R$1.0 billion, and it would be trading on a PE ratio of 21.2x, assuming you use a discount rate of 22.6%.
  
• Given the current share price of R$22.69, the analyst price target of R$28.04 is 19.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.