Pruksa Real Estate

Pruksa Real Estate Plc (PS)

What’s new? PS announced its 2Q12 presales. Low-rise presales beat all anticipation. Low-rise presales in June normalized to pre-flooding levels—Bt2.60bn versus an average of Bt2.35bn/month in Jan-Sept 2011. Low-rise presales in June were 8% above our expectation. Due to fewer condo launches, PS posted total 2Q12 presales of Bt7bn, down 23% YoY but up 24% QoQ. The firm reported condo presales of Bt1.5bn in 2Q11 versus Bt1.1bn in 2Q12.
Strong TH as expected: TH presales normalized to a pre-flooding level in May-June, in line with our expectation (Bt1.5bn in May and Bt1.6bn in June versus a Bt1.4bn monthly average in Jan-Sept 2011).
SDH presales positively surprised: Actual SDH presales in June achieved a normal pre-flooding level of Bt1bn (versus a Jan-Sept 2011 monthly average of Bt936m). SDH presales in June were 10% above our estimate. 
Big project launch will drive low-rise presales growth: Low-rise presales will increase QoQ in 3Q-4Q12, led by the launch of a big land plot at Pattanakarn on June 30 (Bt10-12bn total project value over three years). The response at the initial launch last weekend was good—the first phase of Bt300m was fully booked. 
PS will report its best revenue since 4Q09: Management guides that the firm will report at least
Bt6.8bn in revenue for 2Q12. We earlier expected only Bt6.2-6.4bn. That would represent QoQ revenue growth of 45% QoQ (flat YoY). It would also ease market concerns about execution risk. We expect a 2Q12 net profit of nearly Bt1bn, up 56% QoQ (flat YoY).
Action: PS’s presales numbers proved our theme call of a full recovery in low-rise presales. We expect a consensus earnings forecast upgrade soon (the street has been much too bearish about PS’s prospects for this year). The stock currently trades at an undemanding FY12 PER of 9.8x versus an FY05-11 mean of 10.2x. PS is our top BUY in the sector.