Asian Property
Increasingly secured growth Outperform - upgrade Share price: Bt7.60 Target price: Bt9.12
Asian Property Plc (AP)
Our recent meeting with management left us feeling more bullish than before. AP’s 2Q12 likely saw continued solid recovery in SDH/TH and vibrant condo sales. Strong 1H12 presales and backlog support an even brighter 2H12 and FY13-14, making the stock a high conviction BUY.
We raise our FY12-14 EPS on brighter sales outlook. Our new 41% higher target price is based on 9x CY13 P/E (+1SD above 5-year historical 7.7x) vs. 7x previously. With its solid presales,
backlog and sales, rising size and visibility, and well-optimised gearing for ROE of above 20%, we believe AP deserves this significant rerating.
Upgrade to Outperform from Neutral
Brighter EPS prospects
Our EPS upgrade over FY12-14 is mainly to reflect: (1) AP’s overachievement in its 1H12 presales
(58% of its FY12 target of THB20bn), (2) solid backlog with rising FY13-14 sales visibility, (3) well-contained expenses via expanding economies of scale, and (4) lowering interest expense on improved gearing and funding costs. We expect EPS to grow 46% in FY12, with continued growth
of 28% in FY13, and 19% in FY14.
Solid topline visibility
By dissecting AP’s presales, backlog and sales YTD, we are now more confident of AP’s ability to deliver solid results. The company was among the top three residential developers in 1H12 presales, surpassing LH for the first time. AP was also in the top three for its 1H12 backlog of THB32.7bn (behind SIRI and PS). The quarterly recovery in SDH/TH (+18% qoq) was evident in
both presales and sales, while condo sales continued to grow (+23% qoq). Backlogs have secured about 89% of our sales estimate for FY12 and 49% of FY13’s.
2Q12 seen rising
We anticipate 2Q12 net profit to come in at THB479m (+2.3% yoy, +13.6% qoq), or THB0.17 EPS on strong sales growth of 20%, gain from divestment of Prebuilt of approximately THB45m,
and a well-contained SG&A ratio at 19.2%. 1H12’s net profit would then account for 41% of our aboveconsensus FY12 forecast.
High conviction BUY
Valuation is highly attractive at only 7.5x CY13 P/E (below 5-year average of 7.7x and peer average of 10x) with decent yield of 4.2%. Upgrade to Outperform from Neutral.
