Pruksa Real Estate

Fully Value; Bt14.00

Price Target : Bt13.10 (Prev: Bt9.85); PS TB

While presales sank sharply, transfers beat market expectations in 4Q11, saved by condo transfer

Less aggressive business plan for 2012, will focus on launching new projects on existing land bank

Maintain Fully Valued, with a revised TP of Bt13.1 pegged to 9x PE and in line with its RNAV

Targeting 49 launches in 2012, against 50 in 2011, and 72 in 2010. This year’s launches will include 28 townhouse, 15 detached house and 4 condominium developments, and two overseas. PS will focus more on launches on its existing land bank e.g. on Pattanakarn Road and Muangthong Thani. Todate, PS has secured land for 28 of its planned launches for 2012.

Relying on low-rise. Backlog had dropped from Bt37.4bn at end-3Q11 to Bt33bn at end-4Q11, but is still huge. However, we are still concerned future presales and transfers, especially for its existing low-rise projects that had been flooded. With only four out of 49 planned launches being condominiums, and condo backlog to be realised this year at only Bt3bn, PS will rely heavily on low-rise properties to drive presales and transfer this year.  Despite the less aggressive plan for land acquisition, we believe PS’ net gearing will remain elevated throughout our forecast period.

Maintain Fully Valued. PS is now trading slightly above our revised TP of Bt13.1, which is pegged to 9x PE and in line with its RNAV. We still prefer AP, SPALI, and QH, which offer superior growth at more attractive valuations.