Land & Houses
Launching more condos
Buy; Bt6.45
Price Target : Bt7.40 (Prev: Bt6.52); LH TB
Moderate growth in residential development earnings, but a strong jump in rental income in 2012
Plans to be more aggressive in condo launches
Maintain BUY with TP raised to Bt7.40, based on SOTP valuation
Targeting 15% growth in presales and 8% growth in revenue for 2012. Growth should be supported by its plan to launch 16 new projects valued at Bt32.6bn in 2012, up 34% from last year. Of the 16 new projects, 6 will be condominiums (vs nil last year). Rental income is expected to jump strongly this year, due to the full-year contribution of Terminal 21 project, a retail cum serviced apartment project opened since 4Q11. Share of profit from associates should continue to rise impressively by about 30% this year.
Divesting assets into property fund – a potential catalyst. LH is looking to divest 3 serviced apartments into a property fund probably in 1Q12. Management estimates that the new property fund will have an asset size of about Bt3bn+, and will offer investors about 7%+ dividend yield. Successful divestment of assets should be a catalyst for the share price, as LH could realise divestment gains and at the same time free up funds for future expansion.
Maintain BUY. The stock now offers 15% upside to our revised TP of Bt7.40 based on sum-of-parts valuation, plus a decent 5.0% dividend yield.
