Supalai

Supalai Plc (SPALI)

Investment thesis: SPALI is one of our top picks for its expected 3Q12 profit leadership (up YoY and QoQ) and record high 4Q12 earnings. Its unprecedented presales backlog of Bt30bn secures 82% of our FY12 revenue forecast, 41% of FY13 and 54% of FY14. We have upgraded our call to BUY (from TRADING BUY) and rolled over our horizon to YE13 with a new target of Bt22.30 (Bt19.80 for YE12), pegged to a PER of 11x (2SDs above its FY05-11 mean). SPALI trades at an FY13 PER of 9.4x, below the 11.5x sector mean.
Impressive 3Q-4Q12 profit outlook: The firm will resume both YoY and QoQ profit growth in 3Q12 (against a YoY profit fall in 1H12, as no new condos transferred). In August, two condos—SPALI Park Asoke-Ratchada (Bt1.4bn; 99% booked) and City Home Srinakarin (Bt1bn; a BOI condo; 20% booked)—will start transferring. SPALI will post a record high 4Q12 profit, driven by two big condo transfers—Park Ratchayothin (Bt2.3bn; 98% booked) and Park@ Downtown Phuket (Bt826m; 90% booked). We expect revenue to rise from Bt1.5bn in 1Q12 and Bt1.7bn in 2Q12 to Bt3bn in 3Q12 and a hefty Bt7bn in 4Q12. 
Three condos will boost 4Q12 pre-sales: We expect 3Q12 presales to jump by 60% YoY, but fall 10% QoQ, due to no new condo launches. 9M12 presales are likely to achieve 70% of SPALI’s FY12 target of Bt21bn, a new record. There should be a surge in presales in 4Q12, driven by three condo