Supalai

Supalai Plc (SPALI)

Earnings in line with our model
SPALI announced record net profit of Bt1.6bn for 4Q12, up by 360% YoY and 185% QoQ. The result was in line with our expectation and the consensus.
The firm announced a DPS of Bt0.35 for 2H12 operations (in line with our estimate, but slightly below the consensus expectation of Bt0.38), which implies a 3.3% annualized yield. XD on March 11; payment on May 7.
Results highlights
4Q12 earnings were driven by record housing sales of Bt5.5bn, up by 135% YoY and 119% QoQ. 4Q12 housing revenue comprised 67% condo, the remainder low-rise. Three condos transferred during the quarter—Supalai Park Ratchayothin, Park Asoke Ratchada, and Park@Downtown Phuket. Housing GM hit 46.1% (its best level since FY04) versus 41.0% in 4Q11 and 41.9% in 3Q12. The SG&A/sales ratio fell to 9.2% in 4Q12, down by 2.7% YoY and 3.0% QoQ, due to top-line expansion. Net gearing dropped from 0.5x at end-Sept to only 0.3x at YE12.
Outlook
We expect SPALI to post moderate YoY profit growth for 1Q13. No condos are due to start transferring in 1Q13. But the remainder of Park Asoke Ratchada and Park@Downtown Phuket will be recognized during the quarter. The low-rise backlog of Bt2.2bn at YE12 is expected to gradually transfer in 1H13.
What’s changed? 
We maintain our model unchanged, due to clear revenue visibility. The presales backlog of Bt31bn at YE12 secures 58% of our FY13 housing revenue projection, 62% of FY13 and 52% in FY14.
Recommendation
Despite clear long-term revenue visibility, SPALI’s 1H13 profit outlook is unattractive. FY13 earnings will be back-end loaded; 2H13 earnings are expected to comprise 80% of our full-year forecast. Most of three condos are planned to transfer in 4Q13—Supalai Park Ratchapruek-Petchkasem (Bt1.7bn; fully booked), City Resort Ratchada-Huaykwang (Bt1.6bn, fully boosked), and Supalai Premier Ratchatewi (Bt2.3bn, 74% booked). The FY13 dividend yield of 3.8% is moderate.
SPALI trades at a stretched FY13 PER of 11.2x, 2SDs above its FY06-12 mean. FY13 PEG is 0.6x which is comparable with the sector mean. Thus, we have cut our rating to HOLD (from BUY) with an unchanged YE13 target price of Bt22.30, pegged to a housing PER of 11.5x.