Rojana Industrial Park

Rojana Industrial Park Plc (ROJNA)

What’s new? ROJNA has raised its FY12 land sales target to 1,500 rai from 1,000 rai because it has signed contracts to sell about 1,000 rai to a group of automotive manufacturers (as we noted in our July 31 report).
Earnings cut and upgrade: This big-ticket deal came sooner than we expected—we assumed the deal would be signed next year. As such, the land transfer will probably be in FY13 rather than FY14. But there is bad news in that ROJNA has cut its land sales target for the Ayudhya park to 100 rai from 400 rai, as buyers have been discouraged by perceptions of flooding risk. As a result, we have cut our FY12 earnings forecast by 13% but upgraded our FY13 number by 22%.
Enhancing long-term land sales visibility: Although we have shifted our land sales transfer assumption for this big-ticket plot from FY14 to FY13, our FY14 earnings forecast declines only modestly, as this group of automotive manufacturers should attract more suppliers to build factories in the estate.
Action: The target revision should generate positive sentiment toward ROJNA in the short-term. We have rolled over our investment horizon to YE13 and arrived at a new target price of Bt12.30. Our BUY rating stands.