L.P.N. Development

L.P.N. Development Plc (LPN)

Profits in line. Net profit was Bt541mn, -38% YoY and +267.8% QoQ. The QoQ robust
growth was due to higher deed transfers upon completion of Lumpini Park Riverside
Rama 3 and Lumpini Ville Phibulsongkram River View and better gross margin due to
large contribution from a 34-35% high-margin for Lumpini Park Riverside Rama 3 (AB).
9M12 net profit is Bt987mn, -47% YoY, 44% of our 2012 forecast and consensus. We
expect a strong 4Q12 and thus maintain our forecast. We roll valuation to end 2013
which raises PT to Bt19.5/share. LPN’s share price has come down ~8% since we
downgraded and valuation now looks justified at current price; we upgrade to Neutral.
We still prefer QH, SIRI and AP, where growth is intact and valuations more attractive.

Key takeaways from analyst meeting:
YTD presales: Bt17bn, exceeding its full year target of Bt16bn, on good response to LPN
CondoTown Chonburi-Sukhumvit, this year’s final launch.
2013 presales growth target: 15% to Bt20bn, with 10-11 new projects of Bt20bn. 2013
revenue growth target: 10-15% to Bt15bn (only LPN), in line with SCBS. Pornsanti Co
will contribute 10% of LPN’s profit, but not for a few more years. It is adding Cha-Am
and Hua Hin to existing markets in Chonburi and Pattaya.
Backlog Bt21bn, fully securing our 2012 forecast, 67% of 2013 and 15% of 2014.

Q4 2012F: Record revenue of ~Bt8bn, but 3Q12’s high gross margin of 34.7% is unlikely to
be repeated since it is mostly low-margin projects (<30%) being transferred. The
company’s margin guidance for 2012 is unchanged at 30-31%. It will also book
~Bt40mn capital gain from sale of Grand Unity.
LPN Ville Srinakarin-Bangna (value Bt700mn) is being canceled as the draft zoning law
prohibits this large a building fronting that small a road. We do not see this as having
an impact on LPN’s 2013 income as it is small. However, if LPN gets a construction
permit before the new zoning law takes effect, it will re-launch the project. It can still
develop TH or home office on this land.