Pruksa Real Estate

Pruksa Real Estate Plc (PS)

- Monthly presales grow continuously
PS's 1Q14 presales were reported at B8.2bn, rising 9%qoq but dropping
34%yoy (B2.6bn from single-detached houses, B3.6bn from
townhouses, B2bn from condominiums). Presales improved
continuously; B1.3bn in January, B2.3bn in February, and B4.6bn in
March. Condominium sales rose from B228m in February to B1.6bn in
March, as four condominium projects were launched. 75% of B484m
total value of Chapter One the Campus Ladprao 1 has been transferred,
and for Plum Condo Extra Rama 2, 42% of B1bn total value has been
transferred. horizontal project sales also improved from B2.1bn in
February to B3bn in March. 1Q14 presales have made up 18-20% of
FY2014 presales target of B41-45bn (higher than our forecast at
B38bn). PS has planned to launch 30-50 new projects in 2014, mostly
horizontal projects.
- 1Q14 profit to drop 54%qoq but grow 34%yoy
Many condominiums were transferred in 4Q13, making 4Q13 income the
record-high. Thus, 1Q14 income is projected to decline qoq but grow
yoy. Income from property transfer in 1Q14 is expected at B7.7bn,
falling 44%qoq but growing 22%yoy, mainly from transfers of horizontal
projects and condominiums that continue from 2013. We project gross
margin at 34% and normalized profit margin at 13.4%. We expect 1Q14
normalized profit at B10.4bn, dropping 54%qoq but rising 34%yoy.
From now on, PS is expected to generate more profit; presales would
increase as constructions of horizontal project and condominium are
completed in 2Q14-3Q14. End-2013 backlog was B37; B17.5bn of which
would be transferred in 2014, making up 57% of our income target.
Horizontal projects sales and condominium stocks would make up
another 43%.
- Buy. FY2014 fair value is B24.62
Increasing presales have a positive sentiment on the price. PS's current
P/E ratio is lower than the statistical average and FY2014 P/E ratio of
10x. We recommend buying. FY2014 fair value is B24.62.