WHA Corporation

WHA Corporation Plc (WHA)
Unrivalled growth outlook. WHA has a very good growth outlook, backed by
exceeding its initial 2013 pre-lease target of 300K sqm to get pre-lease contracts of
320K sqm in 1H13. It has raised its pre-lease target to 500K sqm for 2013, substantially
higher than our previous forecast of ~200K sqm, and has a goal of 300K sqm in 2014.
Now in talks with several clients, WHA is poised to reach its target. We have tripled our
estimate of property sales to Bt6.4bn for 2013 and raise 2014 estimate by 67% to
Bt5.7bn, which we believe it can meet given its large portfolio. We see no risk of
recapitalization in the near term.
Expansion. WHA has acquired land in Lumpoon, Khon Kaen, and Surat Thani, strategic
locations for distribution in the north, northeast and south of Thailand, respectively.
Then, the setup of the ASEAN Economic Community (AEC) in 2015 will strengthen
demand for warehouse space. In anticipation, WHA is entering Myanmar with its
warehouse business, where it is also taking out long-term contracts, limiting risk.
Rooftop solar photovoltaic project = upside risk. WHA will take stake in a rooftop
solar photovoltaic project JV, expecting to win a 25-year power purchase agreement
(PPA) for 30MW. With 75% in the JV, we estimate WHA will have profit of ~Bt75mn p.a.
or 4.7% of our 2014 profit forecast; DCF at Bt1.2bn or Bt1.3/share post XD. If the
company sells 15MW to an infrastructure fund, we estimate a rise in net profit to
~Bt355mn in 2014 or 22% of 2014 forecast; DCF to Bt1.5bn or Bt1.6/share post XD. We
did not include this in our current forecast, preferring to leave it as an upside risk.
Earnings and PT upgrade. We raise our earnings forecast by 66.7% to Bt1.4bn for
2013 and 79.9% to Bt1.7bn for 2014 to incorporate the higher-than-expected revenue
recognition driven by larger than expected portfolio expansion and property sales. This
raises PT to Bt67/share (pre stock dividend) or Bt45/share (post 2:1 stock dividend, XD
September 2) reflecting the raise in earnings, lower cost of debt, and roll-over to mid-
2014. Risks are construction delay, sluggish property sales and economic slowing.
Reiterate BUY. We like WHA for its outstanding outlook driven by rapid portfolio
expansion and higher property sales, good future demand for warehouses and upside
from the rooftop solar photovoltaic project. At last close, WHA was trading at a
premium at 17-24.6x PER and 5-7.4x PBV of 2013-2015F, but, in our view, this is justified
by its outstanding earnings growth outlook with 3-year CAGR of 109.9% for 2012-2015,
and solid ROE of 34.4-36.8% and ROA of 13.5-13.9% for 2013-2014. We reiterate BUY.