Asian Property

Asian Property Plc (AP) 

9M12’s presales grew 63% yoy to THB16.4bn despite the lack of new condo launches in 3Q12. The full recovery in SDH/TH presales was encouraging for revenue stability. Our FY12 sales revenue estimate is 100% secured by backlog, while visibility for FY13-14 has improved. Our EPS estimates are unchanged, pending the 3Q12 results. Our target price is higher as we roll forward to end-13 and apply 10x P/E (9x previously), 1SD above mean, to reflect its strong brand and presales momentum. Our Outperform rating is supported by a promising upside and attractive yields. Near-term catalysts include a strong 4Q12, with sizable condo transfers. 
 

What Happened
AP announced 3Q12 presales of THB4.7bn, up 25% yoy, but down 21% qoq due to the lack of new condo launches. AP shifted the launch of its Aspire Sathorn-Taksin phase 1 condo worth THB890m to 4Q12 due to a delay in the construction of the mockup rooms at its sales office.
9M12’s presales were THB16.3bn, up by a healthy 36% yoy. Both SDH/TH and condos showed impressive gains of 13% and 63% yoy, respectively. The backlog as at Sep 2012 was
THB33.6bn, of which THB9.8bn is pending transfer in 2H12, THB11bn in FY13, THB7.2bn in FY14, and THB5.6bn in FY15.

What We Think
We view 9M12’s presales momentum and solid backlog as positives for AP’s earnings visibility. Our FY12 sales revenue estimate of THB16.5bn (lower than AP’s target of THB17bn) is 101% secured by backlog, while FY13 is 51% and FY14 is 30% locked in. Note that AP’s average
rejection/cancelation rate is around 15%. More positive signs include consistent quarterly recoveries in both presales and sales revenue of SDH/TH, sustained at above the 3-4
year means. These should act as earnings stabilisers, while condos remain the expansive growth engine. With rising sales visibility, we see EPS growth firmly in the range of 19-46% over FY12-14.

What You Should Do
Stay invested. Upside potential for FY12 does exist, considering our conservative growth forecast for SDH/TH sales. Valuation is attractive at 8.9x CY13 P/E and 7.7x CY14 P/E, compared to the peer average of 11x CY13 P/E, while yield is decent at 3.5%.