Amata Corporation

Amata Corporation Plc (AMATA)

Below estimate: AMATA reported a 2Q12 net profit of Bt192m, up 14% YoY but down 3% QoQ. The result was 49% below our estimate and 37% lower than the consensus, due to lower-than-expected land revenue and margin.
Result highlights: In 2Q12, AMATA transferred around 410 rai of land—400 rai at Amata City and about 10 rai at Amata Nakorn. As land at Amata City is much cheaper and carries a lower margin than land at Amata Nakorn, revenue and margin in 2Q12 fell short of our model—we had assumed that about half the land transfers would be at Amata Nakorn and the remainder at Amata City.
Revenue from land transfers jumped by 45% YoY and 59% QoQ to Bt843m, while land GM was 48.9%, down from 61.1% in 1Q12 but still up from 45.0% in 2Q11.
Outlook: We expect a better result in 2H12, due to more land transfers and a better revenue mix. Management remains confident that the firm will achieve its FY12 land sales target of 3,000 rai. We, however, assume 2,400 rai.
What's changed? We have slashed our FY12 earnings forecast by 19% to Bt1.12bn to reflect weaker-than-expected 2Q12 results and a sub-optimal transfer schedule. As such, our YE12 target price declines to Bt20.20 from Bt22.
Recommendation: Despite our earnings and target price cuts, our new target price still implies 18% share price upside. We anticipate news flows about big-ticket land sales some time in early 4Q12, which would act as a share price catalyst. Our BUY rating stands.