AP (Thailand)

AP (Thailand) Plc

- QTD presales at Bt3.9bn from Bt2.2bn in 1Q14, at Bt6bn for 5M14
- Pre-sales lifted by better take-up rate for three condos, high low-rise
presales and no huge cancelations for Rhythm Sathorn
- 2Q14 profit to be better QoQ and then grow sequentially to peak in 4Q14
- Good near-term trade on presales recovery and cheap valuation

Strong presales in April-May. As we had anticipated, presales jumped to Bt3.9bn in
April-May from Bt2.2bn in 1Q14. The 3-month moving average indicates presales have
been trending up since February. This brings presales to Bt6bn in 5M14, 33% of its full
year target. The growth was backed by several factors. First was a better response
than expected to recent three condo launches - Rhythm Sukhumvit 36-38, Rhythm
Asoke 2, and Aspire Ratchada-Wongsawang. Then, low-rise presales also returned in
May from April’s seasonal low. Finally, the large cancelations for Rhythm Sathorn in
December 2013-March 2014 have stopped. We expect 2014 presales to peak in 3Q14.
Look for better performance QoQ in 2Q14, backed by more condo transfers: Life
Ratchadapisek (backlog Bt2.7bn) will be completed in the quarter and transfers begin
plus there will be continued transfers of two other condos - Rhythm Pahol-Aree and
Rhythm Sukhumvit 44/1 with outstanding backlog of Bt1.5bn and Bt1.3bn respectively.
These are expected to be transferred in entirety this year. AP will release its results on
August 13.
Sequential growth QoQ to peak in 4Q14, backed by completion of Aspire Rama 9
(backlog of Bt1.2bn) in 3Q14 and Rhythm Sathorn (Bt440mn), Aspire Sukhumvit 48
(Bt650mn), Rhythm Sathorn-Narathiwas (Bt900mn) and Aspire Rattanathibet
(Bt250mn) in 4Q14.
One of the cheapest valuations, maintain BUY. Though share price has risen 13%
over the past month and 30% YTD, at last close AP is trading at an undemanding
valuation of just 6.7x PER and 1.0x PBV of 2014F, the lowest of the top seven
developers. It is also trading at a discount to its mid-range valuation. We peg AP as a
good trade on operational recovery plus cheap valuation and remain BUYers.