Land & Houses

Revenue and presales meet target HOLD

Land & Houses Plc (LH)

- 3Q14 profit weakens from lower condominium transfer

LH’s net and normalized profit stood equally at B1.73bn in 3Q14, decreasing

13%qoq and 8.5%yoy as a result of lower condominium transfer since there

was no new condominium complete. Revenue booked from property sales

was B6bn or a decrease of 16%qoq, B5.6bn from horizontal projects,

showing flat growth from 2Q14, and B340m from condominiums. Gross

margin from sales stabilized at 36.3%, while shared profit from subsidiaries

(QH, HMPRO, Q-CON, and LHBANK) stayed at B584m. Consequently,

normalized profit margin was 26.4%. Overall, 9M14 normalized profit grew

3.4%yoy to B5.17bn, representing 74% of FY2014 forecast. Presales in

3Q14 increased to B10.9bn from three new condominiums, The Key

Charoenrat, The Room Charoenkrung 30, and The Room Sathorn – St.

Louis, which have total sales of B1.2bn, and from 333 Riverside which has

been sold by 80% of its total value of B7bn. Accordingly, 9M14 presales

were B26.3bn; presales of over B32bn are expected in FY2014.

- Growth expected in 4Q14

We project to see profit growth in 4Q14 from transfer of two new

condominiums: The Room BTS Wongwianyai and Wan Vayla Khao Tao;

B6.06bn of total backlog of B22.5bn is scheduled for transfer in 4Q14.

Overall, profit of B7bn or the growth of 8%yoy is expected in FY2014. In

addition, an establishment of REIT for Terminal21 (both shopping mall and

service apartment; LH holds 60% stake) is projected to be approved by the

SEC in November and the process will start from late 2014 until early 2015.

- Reiterate HOLD. 2015 fair value is B10.09

We switch to use 2015 fair value (sum of the parts) of B10.09, which is

close to the current share price. HOLD is reiterated.