Rojana Industrial Park

Rojana Industrial Park Plc (ROJNA)

Beat estimate massively: ROJNA posted a 2Q12 net profit of Bt704m, up by 297% YoY and 108% QoQ. The number beat our estimate of Bt217m and the consensus of Bt179m by a country mile, due to a higher-than-modeled land price for the 300-rai plot transferred to Gulf JP and unexpectedly large revenue booked from transferring condominium units in China.
Results highlights: The firm reported land revenue of Bt1.2bn from the transfer of 300 rai to Gulf JP, implying a price of Bt4m/rai, 20% higher than our estimate. Land GM, thus, surged to 69% from the normal range of 55-65%.
ROJNA recognized Bt443m in receipts from transferring condominium phase 1 in China. The GM of the project was an impressive 45.7%.
It also booked an insurance payout of Bt273m for business interruption at its power plant. The payouts should continue until the plant resumes a full operating rate in late 4Q12.
Outlook: 2Q12 may be the peak of the year if ROJNA cannot sell its hotel in China in 2H12. We do not expect a big-ticket land transfer in the second-half of 2012 and the value of the remaining condominium units in phase 1 is small (the transference of phase 2 should start next year).
What’s changed? We have upgraded our FY12 earnings forecast by 49% to factor in the consensus-shattering 2Q12 result. Hence, our YE12 target price rises to Bt10.90 from Bt10.50.
Recommendation: We view ROJNA as a story play. Events that would make for upside to our model include a big-ticket land sale at its new park in Prachinburi and a gain on the sale of its hotel in China. With 22% upside to our YE12 target price, we maintain our BUY rating.