Pruksa Real Estate

Pruksa Real Estate Plc (PS)

First 8-month presales at B17.6bn in total. 18 new projects to open in 4Q12
PS’ number of presales in the first 8 months of 2012 stands at B17.6bn as 73% of which came from presales of horizontal projects, reflecting the recovery of confidence and decline of customers’ concerns toward the flood. For the first 3 quarters of the year, PS has average opened new 7 projects per quarter while there will be 18 new projects in total worth of B14bn to be opened in 4Q12. Accordingly, presales in 4Q12 are likely to be boosted to peak, driving FY2012 total presales to race toward B26bn with no difficulties. In terms of projects at end-2Q12, there were 146 projects in total in progress while the projects left for sale are worth of B56.7bn. Backlog at end-2Q12 stands at B34.1bn (on the graph on p.2), divided into detached house-townhouse projects (B14.9bn) ready for transfer in 2H12 and condominium projects of which revenue is to be recognized on during 2012 at around B3.04bn and B8.86bn in 2013 while the rest are to be recognized in 2014-2015 which is a guarantee of revenue.

2H12 profit to shine, urging FY2012 total profit to new high
In 1Q12, PS’ earnings result has B633m of net profit, increasing to B1,002m in 2Q12. According to the backlog, the projects left for transfer during the rest of 2012 are worth of B14.9bn. Moreover, there’re stock ready for sale-transfer in 2012 worth of B5.28bn while the condominiums that have reached transfer are worth of B3bn. Due to the mentioned factors, PS’s earnings results in 3Q12 and 4Q12 are projected to grow continuously. We project B3.97bn of net profit and norm profit for PS, considered a new record high, believing that PS will constantly hit new high in 2013 as profit is projected at B4.47bn. Overall, PS focuses more on developing horizontal projects, which the company has expertise of. Accordingly, the cash flow and financial status tend to improve gradually.

Fundamentals believed to boost share price to 12x PER,or B21.59
The rapid recovery of sales and transfer for PS’s horizontal projects are the factors to boost the company’s earnings result and financial status to the mode of new-round growth, likely to urge the continuous peak of profit. In terms of the share price after we’d switched our commendation to “BUY” on 20 April 2012, it has increased gradually to around B18 (recommended level of “BUY” is B14.60). We’re convinced that the share price will ascend to the fair value at B21.59 soon.