Supalai
Q3 2012 profit projected to recover before peaking in 4Q12. Likely to revise down forecast HOLD
Supalai Plc (SPALI)
Q3 2012 profit projected at B569m or 87% QoQ increase, but 13% YoY decrease
SPALI’s Q3 2012 presales have increased by B3.41bn, resulting in B13bn of total 9M12 presales which can be divided into B8.71bn from condominiums and the rest from horizontal projects.
Moreover, there’s B1.66bn of presales from the subsidiary. For Q3 2012 revenue recognition, it is projected at B2.63bn (and B56m of rental and service revenue). According to the abovementioned recognition of sales revenue which includes B547m from condominiums (B460m from Premier Ratchayothin and B87m from City Home Srinakarin), the average gross margin has increased to 42% compared with 40.4% of the prior quarter. For the selling and administrative expenses, they are at 12% of the total revenue. Accordingly, the norm profit margin has risen to 21.2% from 17.5% of the previous quarter. With the abovementioned factors, SPALI’s Q3 2012 profit is projected to
stand at B569m or 87% QoQ increase but 13% YoY decrease.
4Q12 profit to peak, but likely to revise down forecast
after announcement of 3Q12 earnings result SPALI tends to gleam in 4Q12 due to presales that are projected to hit B6bn, thanks to 8 openings of new projects (5 horizontal projects and 3 condominium projects) worth of B9.08bn. In terms of revenue recognition, backlog at end-3Q12 stands at B28.6bn which would be transferred in 4Q12 by B6.2bn with 4 condominium projects in total to generate profit (2 projects to be transferred continuously from 3Q12 while the rest would be
transferred in 4Q12). As a result of the mentioned high transfer, the norm profit margin would leap significantly. We maintain our profit forecast; however, we might consider revising down 2013
forecast to be in line with the business plan and the overall look of the market.
Reiterate “HOLD”. 2012 FV is 10x PER or B18.79
The upside compared with 2012 fair value is quite low. Nevertheless, with the expectation toward 4-5% dividend yield/year, we reiterate our recommendation of “HOLD”. Fair value at end-2012 stands at B18.79 or 10x PER.
