Amata Corporation

Amata Corporation Plc (AMATA)

Far below our estimate
AMATA reported a 1Q13 net profit of Bt131m, down by 58% YoY and 47% QoQ. The number was 67% below our estimate and undershot the consensus by 57% because land transference and land gross margin were both lower than assumed.
Results highlights
Revenue from land dropped by 40% QoQ and 15% YoY to Bt709m, as only 360 rai of land was transferred in 1Q13—40 rai at Amata Nakorn and 320 rai at Amata City—against 640 rai in 4Q12. Land GM declined by 10% QoQ and 15% YoY to 40% because there was a higher proportion of slim-margin land (at Amata City) in the sales mix.
Utilities sales totaled Bt297m, up 23% YoY on increased utilization rates among manufacturers in AMATA’s estates, but down 2% QoQ on seasonality. Utilities GM expanded by 4% YoY and 16% QoQ, but that wasn’t enough to offset the effect of squeezed land GM, as utilities sales comprised only 26% of total sales. As such, blended GM contracted by 11% QoQ and 17% YoY to 40%.
Outlook
We remain optimistic about the FY13 earnings outlook, due to anticipation of greater land transference during 2H13. As of end-March 2013, AMATA had a huge backlog of land booked (but not yet transferred) worth about Bt8.3bn to be recognized as revenue over the next 18 months. YTD land bookings were only 220 rai against an FY13 target of 3,000 rai. However, we maintain our FY13 assumption unchanged, as we expect letters-of-intent for 2,000 rai to be converted to land bookings during 2H13.
What’s changed?
1Q13 earnings account for only 9% of our full-year projection. But we maintain our FY13 profit forecast and target price unchanged for the moment. Note that AMATA will host an analyst meeting today.
Recommendation
Any price slippage as a result of disappointment over 1Q13 earnings would present a buying opportunity. We expect earnings to regain momentum in 2H13 on accelerated land transference. AMATA currently trades at an FY13 PER 0f 17.6x (0.8SD above its long-term average). The historical record indicates that its last valuation peak was in 2010 at 2.5SDs above its long-term mean. Our BUY rating stands with a YE13 target price of Bt28, pegged to a PER of 20x (a mid-cycle valuation that is 1.5 SDs above its long-term average).