Pruksa Real Estate

 

 

It has been reported that management expects sales revenue to overshoot its FY12 target of Bt26 billion by 7.6%, thanks to solid backlog and 1H12 sales recovery. It also guided for the highest earnings ever in its history. PS also reported favourable 7M12 presales of THB15.3bn, 53% of its FY12 target with 71% contributed by SDH/TH. Backlog is THB35bn (THB16.8bn pending transfer in 2H12, THB8.9bn in FY13, THB6.1bn in FY14 and the remainder in FY15). 25 new projects worth THB13.1bn are slated for 2H12 (seven worth THB3.8bn in 3Q12, 18 worth THB9.3bn in 4Q12; out of 25 projects, 23 are TH/SDH and two condos). 

PS remains one of our top picks in the property arena.

Despite the potential upside to FY12 sales revenue, we maintain our EPS estimates, which are above consensus. Valuation is undemanding at 7.2x CY13 P/E vs. its historical average of 9.2x. Maintain Outperform and target price, based on 10x CY13 P/E (+1SD from the average). A near-term catalyst is stronger anticipated 3Q12 results.

As PS’s FY12 revenue target (same as ours), which is 12% yoy higher, is already an ambitious one considering that PS was the worst hit by the floods, we keep our estimates unchanged. We think PS could carry forward some potential additional revenue to FY13, which would be positive for FY13 earnings visibility. While some investors are still sceptical about PS’s even more exciting FY13 outlook on high-margin condo backlog worth THB8.9bn, we see broadly divided market perception of PS’s turnaround story as a re-rating catalyst if PS can surpass market expectations for, say, two years in a row. We expect EPS growth of 36-39% over FY12-13 vs. peer average of 15-20%.

PS’s recent corporate rebranding efforts (focus on better quality after-sale services and construction technology) should contribute meaningfully to sustainable long-term growth.