Land & House

Land & House Plc (LH)

3Q12’s profit and presales grow from SDHs and condominiums
LH declared 3Q12’s net profit and norm profit at B1.5bn, rising
33.5%qoq and 66.6%yoy. The contributing factor was income
recognition from property sale at B6.3bn, increasing 16.6%qoq
thanks to horizontal projects of B4.9bn and condominium projects of
B1.36bn (from a transfer of 53% of a B1.86bn-worth The Key
Chaengwattana). At the same time, gross margin has increased to
35.1% from 33.3% in 2Q12 due to a hike of selling price at a higher
rate than the cost for pre-built houses which reflected improving
demands for horizontal projects. In addition, share of profit from
subsidiaries enlarged to B528m because QH could book profit from a
service apartment sale. At the same time, presales in 3Q12 stood at
B7.46bn, increasing 14%qoq from medium-class SDHs that showed
larger sales, 3 new condominium projects opening in 2Q12 that
have been sold rapidly by 70-90%, and a B400m-worth new
condominium project North 8 Chiangmai which has been sold by
90%.


Increase 2012’s forecast 15% due to surprising income and gross margin
Presales and income recognition in 9M12 were better than expected
and likely above our target for the full year. Presales in 9M12 stood
at B19.2bn, compared with the target of B22bn for FY2012. Income
recognition in 9M12 stood at B15.9bn, compared with the target of
B20bn for FY2012. Consequently, we revise up our forecast for
income recognition and gross margin to be in line with LH’s better
performance. As a result, new norm profit forecast for 2012 is
projected at B4.7bn, up 15% from previously. Additionally, in 2013
the company would expand its projects to other provinces including
Chiangrai, Udon Thani, and Samut Sakhon, emphasizing on
horizontal projects in order to increase the portion of provincial
projects from only 15% of total projects at present. At the same
time, for Bangkok, the company would increase the portion of
medium-class townhouses and condominiums as well as high-end
projects. All these would make profit in 2013 grow to B5.25bn. At
end-3Q12, LH’s backlog equates to B7.7bn (B2.5bn are horizontal
projects and B5.2bn are condominium projects).


Fair value, using SOTP, is B9.40. 3Q12’s div yield is B0.1/share
2013’s fair value, using sum of the parts, is B9.40. We recommend
“hold to receive dividend”. The company has announced an interim
dividend for 3Q12 at B0.1/share. XD date is on 23 November, while
payment date is on 12 December 2012.