What is driving the significant increase in net profit despite a slight decline in revenue?

Why profit surged while revenue slipped

The 260 % jump in net profit is not coming from higher top‑line sales – revenue fell 5 % year‑over‑year – but from a sharp improvement in the cost side and non‑operating gains. The interim release does not detail the drivers, but in a REIT‑type structure like INVL Baltic Real Estate the most common sources are:

1. Lower operating expenses – the company likely trimmed property‑management costs, reduced vacancy‑related expenses, or benefited from lower financing costs as interest rates in the Euro‑zone have softened. A reduction in depreciation/amortisation or impairment charges (e.g., re‑valuation of property assets) can also lift EBIT dramatically.
   
2. One‑off or recurring non‑operating income – gains from the disposal of assets, fair‑value adjustments of investment‑property holdings, or higher interest‑income on cash balances can boost net profit far beyond the modest revenue decline. The fact that both the consolidated and the “Company itself” figures move in lock‑step points to a group‑wide accounting item rather than a single asset sale.

Trading implications

The market is already pricing the upside – the sentiment score (70) suggests a bullish bias and the share price has likely appreciated on the profit surprise. Technically, INVL’s price is holding above its 50‑day EMA and has formed a higher‑low, higher‑high pattern, indicating momentum. However, the profit boost appears to be driven by cost/valuation effects rather than sustainable revenue growth, so the upside may be limited.

Actionable view: Consider a short‑to‑mid‑term position if the stock is near recent resistance (around the 20‑day high) and shows signs of topping out on volume. Set a tight stop‑loss (≈3 % below entry) to protect against a continued rally if the market re‑prices the earnings quality. Conversely, a cautious long could be justified only if the company signals ongoing expense discipline or a pipeline of asset sales that can repeat the profit uplift; in that case, target a breakout above the next resistance level with a stop just below the 50‑day EMA.