Sansiri

Sansiri Plc

Sansiri’s three-day ‘Life Comes Home’ property fair starting today is likely to
be another success given strong consumer sentiment. The company expects
presales to hit Bt8bn at this event, and we believe there is a chance of
overshooting this target due to a better mix of condo projects. Note that SIRI
share price shot up 11% in one month after last year’s property fair. We
continue to rate SIRI a BUY with a revised target of Bt6.6/share.

Heading for another successful property fair. SIRI targets Bt8bn in presales at its
upcoming “Life Comes Home” property fair scheduled for February 15-17 at Siam
Paragon. This would represent a solid 116% growth from last year’s presales at the fair.

If so, SIRI could hit another record quarter with presales of Bt18bn, up 64% YoY.

Condos taking lead role this time. SIRI’s lineup of condo projects at this year’s
property fair (11 projects worth Bt18.2bn) in terms of value is more than double those
presented last year (7 projects worth Bt8.2bn). As condo projects generally secure
higher take-up rates than other types of properties, the company’s total presales
target of Bt8bn during this event, which is based on the same take-up rate as last
year, looks easily achievable with room for upside surprise. Note that SIRI’s average
take-up rate for the three condos launched in January was as high as 85%.
Presales growing. We estimate presales growth of 14% YoY to Bt48.6bn in 2013
based on 51 new project launches worth Bt60.5bn, up 7% YoY, with condo projects
accounting for 58%, single detached houses 37% and townhouses 5%. These 51 projects
are based on secured land deeds, which means there could be further upside should
SIRI expand its land bank further.
Strong earnings growth with high visibility. We estimate a jump in SIRI’s 2013
revenue and net profit of 25% YoY and 30% YoY, respectively, to Bt35.7bn and Bt4.1bn.
With economies of scale in place, this implies net margin improvement to 11.1% in
2013 from 10.5% in 2012. SIRI’s current backlog of Bt43.3bn secures 61% of our revenue
forecast for 2013 and 34% for 2014.
Best play on Thailand’s upcountry urbanization. SIRI has the highest and broadest
exposure to the Thai provincial markets of all leading property developers, with this
segment accounting for 40% of its presales last year. We believe the provincial markets
have the most exciting growth prospects in Thailand in the coming years. SIRI already
has projects in Phuket, Chiang Mai, Hua Hin, Pattaya, Khon Kaen, and Khao Yai; and
plans to penetrate into other new markets, namely Rayong, Udon Thani, Korat, Maha
Sarakham, Sriracha, Bang Saen and Hadyai soon.
Our top sector pick. We raise our TP for SIRI to Bt6.6/share (fully-diluted) based on a
revised PBV target of 3.5x, in line with that of its peers. We believe the stock should no
longer trade at a valuation discount given the rising visibility of its earnings growth
and ROE improvement. The upcoming property fair could serve as a catalyst similar to
last year when the stock jumped 11% in the month after the event. This could be
repeated as the stock is trading at an attractive PE/G of only 0.4x.