Pruksa Real Estate

Pruksa Reall Estate Plc (PS)

3Q12’s profit projected at B1.05bn, up 38% yoy
In 3Q12 PS has made presales at B7.99bn although the company has opened only 5 new projects in the quarter, making total presales in 9M12 stand at B20.7bn. Combined with the company’s plan to open 18 new projects worth of B14bn in 4Q12, presales target of B29.3bn might not far from reach, especially under the current situation that the risk from the flood has receded significantly. For project transfer and income recognition in 3Q12, it is estimated at B7.15bn (B2.4bn in Jul,
B2.1bn in August, and B2.65bn in September). In terms of profitability, gross margin is projected to remain flat at 34.5% as majority of the income structure is horizontal projects while condominium and overseas projects comprise only B311m and B41m respectively. Selling and administrative expense is anticipated at B1.07bn or an increase of 15% close to that of the prior quarter due to small opening of new projects. Overall, net profit margin of PS is projected at 14.72% or the net profit of B1,052m, increasing 38%yoy and 5.05% qoq.


Backlog estimated at B35bn, good promise for the future
If the income recognition is in line with our projection, backlog at end-3Q12 would increase to B35bn, which is considered as a promise of good income in the future. In addition, in 4Q12 PS
might recognize B10bn in income from a transfer of 2 condominium projects and horizontal projects in the backlog. Moreover, there might be additional income from a sale of projects that finish construction by 2012. We maintain our profit forecast for FY2012 at B3.97bn, increasing from B2.84bn in 2011, while profit in 2013 is anticipated to thrive continuously to B4.47bn. With the improving profit outlook, PS’s financial status would become stronger as it had been in the first 3 quarters of 2012.


Fair value at 12x PER is B21.59 in 2012 and B24.33 in 2013
The share price has risen gradually but is still lower than the base price of above B21/share before the flood crisis although the targeted profit base in 2012 has made a new high. We maintain fair value at 12x PER at B21.59 for 2012 and B24.33 for 2013. Reiterate to buy.