Amata Corporation

Amata Corporation Plc (AMATA)
Profit in line with model: AMATA reported a 1Q12 net profit of Bt198m, up 77% YoY but down 59% QoQ. The result was below our estimate, due to lower-than-expected land transfers during the quarter.
Result highlights: Revenue increased 63% YoY but was down 43% QoQ to Bt894m following Bt529m (around 200 rai) in land transfers (up 103% YoY but down 58% QoQ). Gross margin dipped to 51.8% from 52.5% in 4Q11, due to a smaller contribution from land revenue (which carries a fat margin). However, land margin increased to 61.1% in 1Q12 from 59.6% the previous quarter because of higher land prices.
Outlook: 1Q12 should prove to be the lowest earnings quarter of the year. We expect the bottom-line to improve in 2Q12 and grow strongly in 2H12. The order book totaled Bt5bn at end-March.
What's changed? Our earnings forecast and target price stand unchanged.
Recommendation: Given ongoing positive news flows about future land sales and the clear earnings visibility lent by the large backlog on-hand, we maintain our BUY rating on AMATA with a YE12 target price of Bt22.