Residential Property

Residential Property 
3Q12A wrap-up
- 3Q12A good growth QoQ and YoY on higher revenue and better margin
- 4Q12F: LPN, SIRI and SPALI to grow well QoQ backed by condo completion
- Presales: 4Q12 best, all to make targets; upside for AP, LH, LPN
- Top picks: QH, SIRI and AP
3Q12A growth good. 3Q12A earnings grew 39% QoQ and 53% YoY on average in 3Q12,
mostly in line with SCBS and consensus forecasts.
Earnings:
- LPN led with growth of 268% QoQ from wider margin and more deed transfers
from completion of Lumpini Park Riverside Rama 3 and Lumpini Ville
Phibulsongkram River View and high margin.
- QH was +204% on one-time gain of ~Bt700mn from sale of assets to QHHR.
- SPALI was third with growth of 85% QoQ backed by deed transfers for Supalai
Park Ratchayothin and City Home Srinakarin.
- LH earnings growth was 33% QoQ partly due to better performance of QH, in
which LH hold 24%, and part from more condo transfer and higher margin.
We will be revisiting forecast for the better margin and revenue.
- AP was weakest with contraction of 28% QoQ on fewer condo transfers. We
cut its 2013, but raised 2014 as we incorporate the changed condo completion
schedule.

Impressive gross margin. Excluding change in product mix for AP and the impact of
accounting change for QH, most had a 1-2% better gross margin QoQ despite costpush;
the exception was PS. This implies developers are able to raise selling price to
more than compensate for the rise in cost. This lines up with the demand/supply
status where new demand is larger than new supply and removes our concern about
margin squeeze and also indicates it is a developers market rather than a buyers’.
Look for strong 4Q12F, especially for LPN, SIRI and SPALI. 9M12 profit for
developers under coverage accounts for 59% of our 2012 forecast and 63% of
consensus. We expect all to improve QoQ in 4Q12 except for QH which will not have a
repeat of the extraordinary gain. Of our universe, we look for robust earnings growth
QoQ for LPN, SIRI and SPALI in 4Q12 backed by backlog transfers in the period.
Presales slip QoQ in 3Q12, rise in 4Q12. Presales for the top seven fell 14% QoQ to
Bt38bn in 3Q12, bringing 9M12 presales to Bt122.7bn, +21% YoY, 76% of their targets.
With more new launches and greater weighting towards condos, we expect presales
to increase in 4Q12. We see upside risk for presales for AP, LH, and LPN due to their
conservative original forecasts and better demand than anticipated; PS and QH will
meet estimates. SIRI and SPALI should achieve their twice-revised targets of Bt40bn
(+84% YoY, +25% from original) and Bt19bn (+38% YoY, +11% from original) respectively.
Sector picks: QH, SIRI and AP: QH remains our favorite based on its operational
turnaround and cheap valuation, while SIRI is a growth stock with a good visibility. We
like AP because of its better 2013 outlook and visibility.