Supalai

Buy; Bt14.40

Price Target : Bt16.50  (Prev: Bt13.46); SPALI TB

Launching Supalai City Resort Ratchada-Huay Kwang today with prices starting from Bt1m+; response should be good

Healthy 14% earnings growth in 2012F

Solid balance sheet, attractive valuation and generous 5.3% dividend yield

Aggressive launch plan. SPALI has scheduled 20 launches this year valued at Bt21.9bn vs 10 projects launches last year. Of the total new projects to be launched, five will be condo projects and the rest low-rise houses. The company has secured land for these projects. Supalai City Resort Ratchada-Huay Kwang to be launched today will comprise five 8-storey blocks offering a total of 875 units for sale. The total sales value is Bt1.6bn. This project targets the low- to middle-income earners with prices starting at Bt1m+ per unit. The project should be well received because of its location, with easy access to MRT Huay Kwang, department stores, hospitals, etc.

Decent 14% earnings growth in 2012F. This would be attributable to an increase in realised revenue and lower corporate tax rates. The statutory corporate tax rate will be reduced from 30% in 2011 to 23% in 2012 and 20% in 2013. 

Maintain BUY.  SPALI remains one of our top picks in the residential property segment, thanks to its strong management team, efficient cost management, strong earnings growth in 2012, relatively high ROE, attractive valuation at 8.6x FY12F PE, and generous dividend yield of 5.3%. We have a revised Bt16.5 TP based on 9.8x 2012F PE, and in line with its RNAV.