Land & Houses

Land & Houses Plc (LH)

Good May presales at an estimated Bt2.3bn, solid growth of 25% MoM, backed by
recovery in low-rise presales after the seasonal low in April; this was, however, a drop
of 15% YoY due to fewer condos, with no new ones launched in May this year whereas
last year the launch of the giant The Bangkok Sathorn met a warm reception. We
estimate a 20% YoY rise in low-rise presales in May thanks to on-plan launches and
more available projects. Total presales are Bt11bn in 5M14, 33% of its full year target.
June presales looking even better. The company says presales in the first week of
June were more than Bt600mn, up 20% from the weekly average in May. Adding this to
the number of registrations for 333 Riverside condo made at the soft launch on May
14-15 gives us confidence presales will grow QoQ in 2Q14. LH expects to sell 30-35% of
the Bt6.5bn project this year, which we see as very possible since it is ideally situated
on the river, at the Bang Po Blue Line station and several shopping areas. Good
presales will support our expectation of presales growth QoQ in 2Q14 to peak in 3Q14.
What is 333 Riverside? This is a condo on 11.5 rai of land on the bank of the Chao
Praya River. It is made up of three buildings: one 42-storey, one 41-storey and one
single-storey, with a total of 950 units with average price of Bt6.8mn/unit. Client
registrations indicate most prefer a river view and are willing to pay an average of
Bt150K/sqm, far above the starting price of Bt110K/sqm or Bt5mn/unit. The official
launch is on June 28.
Upside risk to presales possible. LH may launch one more condo in 4Q14 in addition
to its current plan of five with total sales value of Bt11.8bn - if the market climate is
positive. The response to 333 Riverside could be an indicator. We see a good chance it
will indeed add another launch, given better consumer confidence and good presales
momentum after the coup in late May. If so, there is upside risk to its presales target
of Bt32bn, though of course no upside for revenue recognition this year.
Maintain BUY. We continue to like LH for its well-balanced business model with both
condo and low-rise products to supply steady growth. Strong presales and
performance in 2Q14 plus upside risk to presales are near term catalysts. We maintain
our BUY with PT of Bt11.5/share (Bt7.6/share for real estate business and Bt3.9/share
for investment).