Residential Property

Residential Property

Land & Houses PCL (LH, BUY, PT Bt11.5/share), presented by Khun Siribhorn
Laophaetkit, Assistant Vice President, and Khun Pornchan Suwanprakorn, Budgeting
and Investor Relations Manager.
Unchanged presales target of Bt32bn, +6% YoY, 62% SDH, 32% condo and 6% TH.
This implies presales growth 9% for SDH, 29% for TH and -3% for condo. It said 1Q14
presales came out over 10% below target for both low-rise and condo due to weak
demand. Despite this, presales grew substantially MoM in February and March.
Low-rise inventory has fallen to ~800 units from 900 units in November-December
2013, nearing the usual 700 units. Reviving marketing raised take-up for The Room
Sathorn to 50% from 30% and The Room Sukhumvit 69 to 20% from 10%.
1Q14 launches put off. LH launched just four projects (Bt6.2bn) of the planned
seven (Bt10bn) in 1Q14. The three (Bt3.8bn) that were not launched in 1Q will be
launched in 2Q, not a big difference. Full-year plan is still 21 new launches (Bt35bn).
Unchanged revenue target of Bt25bn, +9% YoY. Despite missing presales target
in 1Q14, LH remains confident it will achieve its revenue target as it has
conservatively forecast transfer of only 80% condo units. As of December 31, 2013, it
had Bt14.8bn in backlog, securing 30% of its full year target.
Revenue target for investment property of Bt2.5bn, +15% YoY, driven by
strong growth in two apartment buildings in the US to Bt280mn this year versus
Bt92mn last year off a full year of operations plus higher rent and occupancy.
Revenue from domestic properties will grow by only 7% to Bt2.2bn. Occupancy at
Grand Centre Point Sukhumvit has returned to a more normal 90+% after dropping
in January-February due to the “Bangkok shutdown”. However, renovations will cut
occupancy for Centre Point Wireless to 60-70%. It plans to invest Bt2.4bn into a new
serviced apartment in Soi Thonglor. Construction will be completed in early 2017.
Improved gross profit margin likely. LH expects at worst a stable gross margin
of 35.8% with potential for upside. Gross margin for condo and TH should be higher
as the low-margin projects were sold last year.