Quality Houses

Quality Houses Plc (QH)

Record pre-sales in 1Q13. QH achieved record presales of Bt7.3bn in 1Q13, +143% YoY
and +57% QoQ, comprised of Bt3.7bn low-rise and Bt3.6bn condo. Of the low-rise,
presales of mid- to low-end products (Gusto, The Trust and Casa brands) was good,
accounting for ~80% of the Bt3.7bn presales. The majority of the condo presales came
from Q Asoke (sold 55% of Bt3.2bn project value) and The Trust Residence
Ngamwongwan (20% sold of Bt3.2bn value). By the end of 1Q13, presales had climbed
to 37% of its full year target. There is upside if the company adds to its planned project
launches in the provinces in 2H13.
Good backlog. At the present, QH has total backlog of Bt12.4bn, which secures 44% of
our 2013 forecast, 12% of 2014 and 8% of 2015.
1Q13 to grow well YoY. QH’s 1Q13 core profit is estimated at Bt450mn, strong
growth of 48% YoY but a drop 37% QoQ. Its bottom line will boosted by a ~Bt100mn
gain from the sale of Centre Point Saladaeng. It will release earnings on May 10, 2013.
Least impacted if BoT takes action. Recent reports in newspapers indicate the BoT
is concerned about the rise in condo prices and the rapidity of presales. If the BoT does
take action to cool the market, it could do so in several ways, one of which is by
lowering the LTV (loan-to-value) for condo mortgages, which would have the effect of
slowing both demand and take-up rates for condos. With few condos, providing only
35% of total presales, QH is positioned to be least affected if the BoT, as the market
fears, intervenes.
Maintain BUY. QH remains our favorite stock, supported by strong operational
growth of 70% this year after last year’s turnaround, and inexpensive valuation. It is
trading at an undemanding adjusted PER of ~10x of 2013. With a strong 3-yr CAGR of
33% for 2012-2015, valuation is cheapest versus peers at 0.3X PEG. Yesterday’s panic
selloff pulled QH’s share price down by 9%, giving, in our view, an opportunity to BUY.