Pruksa Real Estate

Pruksa Real Estate Plc (PS)  

 

- 1H15 presales meets target   

Since there were long holidays in April, PS had fewer visitors, so presales dropped to B2.5bn in April and then rebounded to B4.25bn in May and B4.38bn in June. PS's 2Q15 presales were B11.1bn (dropping 12.4%qoq), B9.48bn (85%) from low-rise projects and B1.7bn (15%) from condominiums. PS launched 13 new projects in 2Q15, 12 low-rise projects valued B7.31bn and one condominium, which is 1,338-unit The Tree Elegance Tiwanon valued B2.7bn; 47% of 480 available-for-sale units were presold already (officially launched in mid-July). 1H15 presales were B24bn, jumping 33.5%yoy and making up 51% of our full-year target of B46.7bn, growing 19.5%yoy (close to the company's target of B47bn).   

 

- 2Q15-4Q15 profit to grow gradually 

PS's profit is projected to grow gradually in 2Q15-4Q15 owing to transfers of 13 new condominiums (see next page). Income from low-rise projects is expected to rise as presales have been high and business cycle has decreased from 87 days in 2014 to about 70 days. We maintain our projection on full-year income from property sales at B46bn, growing 8.2% yoy; current backlog is projected to generate at least 70% of the income goal this year. Normalized profit margin is expected to fall from 15.6% in 2014 to 13.8%, making the year's low at 10.7% in 1Q15 due to clearance discount, and then rebound as transfers of projects would generate more profit in the next quarters. Overall, we estimate PS's FY2015 net profit at B6.39bn. 

 

- High upside, 4% dividend yield 

We maintain FY2015 fair value at B34.46, with 12x P/E ratio and as high as 42% upside. Expected average dividend yield is 4%. As current P/E ratio is 8.4x, we reiterate buying for long-term investment.