Pruksa Real Estate

Pruksa Real Estate Plc (PS)

4Q13 net profit new high as expected. FY2013 net profit grows 49%
PS's 4Q13 net profit was B2.26bn, growing 67%qoq and 79%yoy as
expected and making a new high. As many condominiums and horizontal
projects were transferred in 4Q13, PS's sales income increased by
40%qoq to B13.7bn. PS's FY2013 total income reached the target at
B38.8bn (B30bn from horizontal projects, B8.45bn from condominiums,
B500m from overseas business), growing 44%yoy. With gross margin at
34.8% and normalized profit margin at 14.9%, PS's FY2013 net profit
was B5.8bn, rising 49%yoy. FY2013 total presales were B41.3bn,
increasing 40%yoy, keeping its top position in the market share in 2014.
In terms of financial structure, PS's net gearing was at 0.84x, lower than
the sector's average. PS announced FY2013 dividend at B0.85/share
(4.4% dividend yield). XD date is 11 March 2014, and dividend will be
paid on 15 May 2014.

- Maintain FY2014 profit target. To revise down profit from new project
January 2014 presales dropped by 35%yoy to B1.26bn as a result of the
political turmoil. Also, the launching of some projects has been delayed.
However, income has been as planned, as its backlog can still be
transferred. PS maintains its FY2014 presales target around B4-4.2bn.
However, fewer projects might be launched, from 40-50 projects to 30-
50, totaling B30-50bn (horizontal projects making up 90%), so presales
are not likely to reach the target. We maintain our forecast, expecting
FY2014 presales and income to decline by 4-6%yoy. However, end-2013
backlog was B37; B17.5bn of which would be transferred in 2014,
making up 57% of our income target. Horizontal projects sales would
make up another 43%. Currently, PS has 164 ready-to-sell projects,
totaling B60bn (B4.8bn from horizontal projects).

"BUY". Maintain FY2014 fair value at B24.62
Though property market has been sluggish in 2014, PS would be able to
keep its top position in the market share in 2014 owing to its superior
competitiveness. As its downside is low and its dividend is attractive, we
recommend "BUY" at the fair value of B24.62 (10x PER).