Pruksa Real Estate

Pruksa Real Estate Plc (PS)

What’s new? PS will announce 2Q12 presales tomorrow. Based on management guidance, we have estimated presales for June (we had presales numbers for April-May) and analyzed PS’s low-rise presales on a monthly basis in order to find out whether they have fully recovered yet. We also forecast PS’s quarterly low-rise presales for 2Q-4Q12.
Low-rise presales normalized in June: We estimate that low-rise presales in June normalized to pre-flooding levels—at least Bt2.40bn versus an average of Bt2.35bn/month in Jan-Sept 2011. The driver was a full recovery in TH presales (TH presales normalized in May). PS posted TH presales of Bt1.5bn for May and Bt1.65bn for June versus a monthly mean of Bt1.4bn for Jan-Sept 2011.  Low-end TH sales fully recovered, as demand picked up in tandem with confidence. The SDH recovery has lagged TH presales, due to higher prices. SDH presales in June were still 20% below pre-flooding levels.
Thus, total low-rise presales are expected at Bt5.6bn for 2Q12 (only 3% below the pre-flooding level), down by 23% YoY but up 85% QoQ. Due to fewer condo launches, PS will post total 2Q12 presales of Bt6.6bn, down 28% YoY but up 17% QoQ. In 2Q11, the firm reported condo presales of Bt1.5bn versus Bt900m in 2Q12.
Big launch will boost low-rise presales growth: Low-rise presales will increase QoQ in 3Q-4Q12, led by the launch of a big land plot at Pattanakarn on June 30 (Bt10-12bn total project value over three years).
Expect 34-37% QoQ growth in 2Q12 revenue: We estimate 2Q12 housing revenue at Bt6.2-6.4bn, above management guidance of Bt6bn (in BLS Property Day, June 1). That would represent QoQ revenue growth of 34-37% QoQ. 
Action: A proved full recovery in low-rise presales in June would boost market confidence in PS. The stock currently trades at an undemanding FY12 PER of 9.7x versus an FY05-11 mean of 10.2x. Our BUY rating stands unchanged.