Pruksa Real Estate

Pruksa Real Estate Plc (PS)
- 3Q13 profit is B1.357bn, growing 36%yoy but falling 12% qoq – below expectation
PS's 3Q13 net profit was B1.357bn, growing 36%yoy but falling 4%qoq, 8%
below expectation, as booked income was 4% lower than expected, possibly
income from condominium projects (condominiums of which the income was
booked in 3Q13 are Fuse Mobius, The Seed Mingle and The Tree Bangpho,
whereas transfer of Urbano Absolute just started). As selling and
administrative cost became higher, SG&A/sales increased to 16.47%,
lowering net profit margin to 13.9% (projected at 14.6%). PS's 9M13 net
profit was B3.539bn, making up 65% of the previous forecast. For PS's
financial structure, end-3Q13 interest bearing debt was B23.313bn with
0.94x net gearing, which was safe. PS's 9M13 total presales were at
B33.767bn. During 9M13, 41 new projects were opened at the total value of
B39.860bn. Due to high presales, FY2013 presales target was revised up
B35.4bn to B39-41bn. In 4Q13, 9-14 new projects are scheduled to be
opened, including four condominiums with the total value of B3.85bn.
- Revise down FY2013 profit forecast by 8% from lower-thanexpected
profit margin
At end-3Q56, PS has 168 total projects that are currently under construction,
with remaining value of B57.2bn and total backlog of B44bn. For the projects
scheduled to be opened in 2013, total backlog is at B16.1bn (construction of
some condominium projects are likely to be delayed, so they would not be
fully transfer, e.g. Plum Condominium Ladprao 101). We believe that income
booked is likely to be close to our estimation, so we maintain our income
forecast. However, in terms of profitability, we expect gross profit margin to
drop and predict SG&A/sales ratio to increase. Thus, net profit margin is
projected to decline from 15.79% in the previous forecast to 14.51%.
Overall, we revise down profit forecast by 8% in 2013 and 10% in 2014.
- Reiterate “BUY”. FY2014 fair value at 12x PER or B30.09
We switch to use FY2014 fair value. Under new forecast at 12x PER, which is
close to current PER, end-2014 fair value is B30.09. We reiterate "BUY"