Pruksa Real Estate

Pruksa Real Estate Plc (PS)
- 3Q13 revenue to grow 12%qoq. Rising SG&A to press net profit margin
PS's 3Q13 presales were at B11.1bn, improving from B10.3bn in
2Q13. Condominiums are likely to make up the highest presales, as
there was the opening of three condominium projects, including two
big projects: The Campus (B1.8bn presales) and The Reserve
(B1.5bn presales). SDH project presales dropped, as only one
project was opened. Townhouse presales improved slightly from
2Q13. 3Q13 revenue is projected to grow by 12% to B10.2bn,
B7.2bn from SDH projects (close to 2Q13) and B2.97bn from
condominium transfers, mainly Fuse Mobius, The Seed Mingle and
The Tree Bangpho; Urbano Absolute has just been transfer late in
the quarter, so its total transfer is still low. PS's gross margin is
projected to stay flat. However, SG&A is expected to rise due to
increase in employees and expenses on the opening of new
condominiums and brand strengthening. Thus, SG&A/Sales would
rise above 15% and press net profit margin to 14.56%, falling 1%
from 1Q13. Overall, 3Q13 profit is projected at B1.48, growing
5%qoq and 48%yoy.
- Maintain FY2013 profit forecast at B5.46bn, B2.47/share
Though 3Q13 earnings result would not be as high as expected
because condominium transfers were later than expected, we
maintain FY2013 profit forecast, as there would be no significant
change in 2013 transfer plan (transfer of Plum Condominium
Ladprao 101 with backlog of B510 is postponed to 1Q14). Most
condominiums transfers are scheduled in 4Q13, and horizontal
projects would be transferred continuously. Construction period has
been shortened. Cancelation or rejection of loan from financial has
not exceeded the normal level. Total backlog of B14bn is scheduled
to be transferred in 4Q13. Thus, PS's FY2013 revenue is likely to
reach the target at B34.5bn.
- Reiterate “BUY”. Fair value at 12x PER or B29.61
Current PS's share price is at 9x PER and 3.87%/year dividend
yield, lower than FY2013 fair value at 12x PER or B29.61. We
reiterate "BUY"