Ananda Development

Ananda Development Plc (ANAN)

Investment thesis
ANAN’s share price will get a boost from record presales last week. Execution risk is easing; the transference of four Ideo Mobi condos in 4Q13 is on schedule. The stock is the cheapest under our ResDev coverage—core PERs of 6.8x for FY13 and 5.9 for FY14 (the FY14 ResDev mean is 8.3x). We have upgraded our target price to Bt4 from Bt3.40 by re-rating our PER peg to 8x from 7x, due to the clearer revenue visibility brought by the huge presales last week.
Bt12bn in presales from four condo launches last week
During Oct 23-27, ANAN held an event at Siam Paragon called Ideo Urban Pulse where it officially launched four sizable condos with a total value of Bt16bn—Ideo Q Chula-Samyan (Bt6.9bn, mean sales price of Bt145K/sq.m; a JV in which ANAN holds 49%), Ideo Q Ratchathewi (Bt1.9bn, Bt165Ksq.m), Ideo Mobi Charun-Interchange (Bt3.6bn, Bt110K/sqm) and Elio Del-Ray (at Sukhumvit 64, Bt3.6bn, Bt70K/sq.m). Presales for the four projects came to Bt12bn, a 73% mean take-up rate. Ideo Q Chula and Ratchathewi were fully booked, half of Ideo Mobi Charun was booked, as was 30% of Elio Del Ray. All four condos are near BTS or MRT stations.
The new presales of Bt12bn last week increased secured revenue from 68% of our FY14 forecast to 77% and from zero of our FY15 forecast to 59%. Elio Del Ray (Bt1bn in presales) will transfer in 2H14; the other three projects will transfer in FY15 (Bt7bn in presales—the firm holds only 48% of Ideo Q Chula). The GM target is 35%.
4Q13 presales leadership
ANAN will lead our coverage in 4Q13 presales growth. We anticipate record high presales of Bt10bn for the quarter (93% condo, the rest low-rise), up by 600% YoY and 70% QoQ. We previously assumed only Bt6bn in presales—the immediate take-up rates of the four condos launched last week were stronger than we had expected. We now model for Bt21bn in presales for FY13, up 115% YoY and substantially above management’s target of Bt16bn.
3Q13 loss is behind us; looking forward to a huge 4Q13 profit
We expect a core loss of Bt94m and a net loss of Bt104m for 3Q13 (net losses of Bt94m in 2Q13 and Bt40m in 3Q12). A bottom-line turnaround is anticipated in 4Q13—a net profit of Bt1.5bn (a net loss of Bt28m in 4Q12). We assume record condo revenue of Bt6.9bn for the quarter (triple YoY and double QoQ). There is also scope for upside to our 4Q13 top-line assumption—management guides for Bt9bn. The key contributors during the quarter will be four Ideo Mobi condos (Bt9.5bn in total value; almost fully booked)—Ideo Mobi Sukhumvit, Sathorn and Rama IX transfer in Oct-Nov and Phayathai in Dec.