Land & House

Land & House Plc (LH)

- FY2014 presales target at B32bn, sales income target at B25bn
Due to the political turmoil, LH has an conservative goal with
FY2014 presales of B32bn, growing 6%yoy, focusing on
horizontal projects while expecting condominium projects to stay
unchanged. FY2014 sales income is targeted at B25bn, growing
by 7%, 81% from horizontal projects and 18% from
condominium projects. LH plans to launch 21 new projects (16
horizontal projects and five condominiums) with the total value
of B35bn, dropping 10%yoy (versus 24 launched projects in
2013). Rental income is expected to rise by 14%yoy to B2.5bn
as profit from two condominiums in the US would be recognized
for a full year and rental fee would increase. Moreover, LH has
made a long-term rent for a 3.5-rai land at Thonglor, planning
to built a B2.5-worth new service apartment (LH holding 100%
stake) to be opened in 2017. Establishment of Terminal21
property fund has been delayed indefinitely, but REIT for service
apartment in Centerpoint Ratchadamri and Asok might be
established instead.
- Normalised profit to grow 27% in 2013 and 6% in 2014
FY2013 sales income is projected at B23.3bn, growing 4%yoy
but below target, as a result of the late-2013 political turmoil.
Transfer would decelerate qoq in 4Q13, making the normalized
profit of B1.6bn. Over B200m extraordinary profit from land
sales would be booked. Thus, LH's FY2013 normalized profit is
projected at B6.6bn, growing 27%yoy. We maintain our FY2014
normalized profit forecast at B7bn, growing 5.6%yoy (close to
LH's target). End-2013 backlog is expected at B14.8bn. B7.5bn
backlog would be transferred in 2014, making up 29% of the
forecast.
- Fair value (SOTP) at B8.86. 2H13 dividend is B0.3/share
LH's income is mostly from horizontal projects, which takes less
time to sell and transfer, so LH's backlog is low and LH needs to
sell a lot of new houses to make profit. Thus, LH is likely to be
affected severely from the current situation. We recommend
"HOLD". Fair value (sum of the parts) is B8.86. 2H13 dividend is
expected at B0.3/share, or 6.2%p.a dividend yield.