Sansiri

Sansiri Plc (SIRI)
In line with our estimate: SIRI posted a net profit of Bt341m for 1Q12, up 58% YoY but down 68% QoQ (record earnings in 4Q11). The result was in line with our estimate, but 12% above the consensus, due to fatter housing GM than expected.
Results highlights: The strong YoY bottom-line was driven by a 43% jump in housing sales to Bt4.9bn (60% low-rise and 40% condo). Housing GM was flat YoY at 34.1% in 1Q12. The rise in sales offset the effect of a SG&A/sales ratio increase (from 23.4% in 1Q11 to 25.5% in 1Q12) related to marketing expenses for a big event at Paragon.
The QoQ profit plunge was due to the high base set by 4Q11—record housing revenue of Bt7.6bn (a 53% condo contribution). GM slimmed 3.6% QoQ, due to lower condo revenue (condo GM is high). The balance sheet weakened somewhat—net gearing rose further from 1.45x at YE11 to 1.51x at end-March.
Outlook: We expect YoY and QoQ growth in 2Q12 earnings (low base comparisons were set by 2Q11 and 1Q12). The net gearing ratio will continue to rise; it is likely to peak at 1.7x at end-June.
What’s changed? 1Q12 earnings represent 13% of our full-year forecast. We maintain our projection unchanged, as the presales backlog secures 75% of our FY12 revenue projection and 47% of our FY13 assumption.
Recommendation: Our TRADING BUY rating stands with a YE12 target price of Bt2.30, pegged to an FY12 PER of 9.7x (1SD above its FY06-11 mean). SIRI’s current multiples are inexpensive—an FY12 PER of 8.1x. Management guides for scope to revise up its FY12 presales and revenue targets, which would boost market interest in the stock.