Asian Property

Asian Property Plc (AP)
Operational wrap-up. AP’s presales were Bt18.3bn in 10M12, reaching 92% of its full
year target of Bt20bn, placing it on track to achieve its full year target. Condo presales
are positioned to beat its full year target, now already making the Bt10bn target and
there is still the launch of Aspire Sathorn-Taksin Phase 1 to come in 4Q12 plus more
presales for the Bt3bn The Address Sukhumvit 39 from its soft launch (official launch is
postponed to 1H13 due to delay in completion of mockup room). Its Bt10bn low-rise
target is now at 83% of target, putting it in reach of making goal.
Earnings revision. We leave our 2012 forecast unchanged, but cut 2013 by 15% to
Bt2.8bn and raise 2014 by 4% to Bt3.5bn as we incorporate the changed condo
completion schedule. Because of last year’s floods, construction of Aspire
Ngamwongwarn, Rhythm Pahol-Aree, Rhythm Sathorn and Rhythm Sukhuvit 44/1 is
moving slowly, moving a portion of revenue recognition for these projects from 2013
into 2014 (see Figure 3). Despite the revisions, 3-year CAGR earnings is a good 30%
(2011-2014).
Large backlog of Bt32bn. Of the Bt32bn in backlog, Bt4.5bn is low-rise and Bt27.4bn
is condo. This fully secures our 2012 forecast, 51% for 2013 and 39% for 2014.
3Q12A result in line with SCBS, but below consensus. 3Q12 net profit was
Bt430mn, -29% YoY and -23% QoQ. The bottom line was given a boost by Bt47mn aftertax
gain from the sale of its stake in PREB. Excluding this gives a core profit of
Bt383mn, -37% YoY and -28% QoQ, in line with our forecast but below consensus. Profit
in the 9M12 is Bt1.4bn, +17% YoY, accounting for 63% of our full year forecast, but we
expect 4Q12 to be the best of the year, leading it to make forecast.
Highlights:
Revenue fell both YoY and QoQ due to fewer condo transfers (The Address Sathorn
12 just started transfers in late September). Condo contribution was 41% of total
revenue in 3Q12 versus 51% in 2Q12 and 3Q11. This also weakened gross margin to
34% in 3Q12 from 38.5% in 3Q11; it was flat QoQ.
SG&A/revenue increased to 19.6% in 3Q12 from 17.9% in 2Q12 and 16.9% in 3Q11,
reflecting rebranding expenses.
Reiterate BUY. We roll over AP’s valuation to end-2013 and raise price target to
Bt10/share with unchanged 2X PBV valuation. Despite the rescheduling of the booking
of condo revenue, AP’s earnings growth is intact at about 30% during 2011-2014. It has
good earnings visibility with current backlog generating income steam until 2015.
Thus, we remain BUYers.