Amata, Hemaraj's dry estates well placed for 2012
Amata Corp and Hemaraj Land and Development are expected to perform well in 2012 on expectations of increased demand for land in dry industrial estates in the aftermath of the floods, brokerage houses said.
DBS Vickers Securities (Thailand) and CIMB Research shared the view that the two industrial estate developers would enjoy higher land sales next year, as none of their estates was affected by the floods, which have inundated seven industrial estates in Ayutthaya and Pathum Thani.
Amata operates two industrial estates in Chon Buri and Rayong. Hemaraj operates six estates, also in the unaffected Eastern region of Thailand.
“Despite weak results in the third quarter and in the first nine months, we believe the stock has priced in most of the bad news,” CIMB said in its research note. “With lower competition, solid commitment from Japa-nese manufacturers and Gheco One’s contribution from the second quarter of 2012, Hemaraj’s brighter outlook for the year 2012 and beyond is warranted.”
Two major reasons for the upbeat assessment are a decline in competition due to the flooding of the seven estates in the Central region, and the strong commitment from Japanese auto manufacturers to keep Thailand as one of their hubs in Asia.
DBS expects Hemaraj’s earnings to jump strongly next year on the back of the contribution of its 35-per-cent-owned affiliate Gheco One, its locations in unaffected areas and a potential delay in the government’s plan to cut Board of Investment’s promotional incentives. Hemaraj in the third quarter showed a 56-per-cent drop in third-quarter earnings to Bt154.5 million, due to a change in accounting standards. In the first nine months, it sold 1,212 rai (194 hectares) and has maintained its land-sale target for the year at 1,700 rai.
“The lower industrial estate revenue recognised to date is due to a change in the accounting method in Thailand from 2011,” David Nardone, president and chief executive officer of Hemaraj, said recently.
“Our expectations are for revenue recognition from industrial estates to be at more normal levels from the third quarter of 2011 and for industrial estate recognised revenue results for 2011 to still exceed the original prior year.”
On Amata, despite a 35-per-cent drop in quarterly net profit to Bt174 million, DBS expected the firm to experience higher demand for industrial land and benefit from a delayed change in BoI incentives.
In the first nine months, it sold 776 rai of land, or 52 per cent of its 1,500-rai target for this year.
CIMB expects it to record exceptional growth in the fourth quarter.
