Asian Property

Asian Property Plc (AP)
3Q13 presales below expectations. AP’s presales were Bt3.6bn, -23% YoY and -22% QoQ, achieving only 85% our estimate for 3Q13. This brings 9M13 presales to Bt12bn,
-26% YoY; as this accounts for only 54% of the company’s full year target and 60% of our forecast, there is some downside risk to our forecast. Behind this is sluggish presales for both condo and low-rise housing, which could in part be the effect of moving two new launches to 4Q13 from 3Q13: the Bt1bn Pleno Phahonyothin-Saimai and the Bt650mn Baan Klang Muang Kaset-Navamin III. Though it launched Aspire Sathorn-Taksin Phase 2 earlier, this did little to boost presales as it is the second project in this location and take-up rate was only 17%, though considered normal for this low-end brand.
Add one new launch this year. AP will add the Bt630mn Aspire Pattaya in 4Q13, its third project in the provinces after Aspire Udornthani (57% sold) and Aspire Pitsanulok (launched in 4Q13), and will be upside risk for revenue recognition in 2015. All told, in 4Q13 AP will launch three SDH for Bt2.6bn, six TH for Bt4bn and three condos for Bt4.2bn, for a combined 12 projects worth Bt10.8bn and we estimate presales of Bt6.6bn in the period.
2013F revenue likely to achieve our forecast. Despite the slow presales, AP is expected to meet our revenue forecast, since backlog of Bt32.2bn already secures 96% of our 2013 revenue forecast, assuming all low-rise backlog is transferred this year. 
Look for marginal earnings growth for 2014. In 2014 net profit is expected to grow only 11% to Bt2.7bn, largely from low-rise houses (+15% YoY); condo revenue will grow just 4% YoY.
Maintain BUY. In our view, AP’s disappointing presales and low revenue recognition in 2013 are already in the price, since its share underperformed the SET by 10.4% over the past three months. The backloaded presales and revenue could be a short term share price catalyst in 4Q13. We maintain our BUY rating.