Amata Corporation

Best of the bunch with more positives BUY

Amata Corporation Plc (AMATA)

Expect land sales to grow next year. The investment climate is improving after the

restoration of political calm and with that, foreign direct investment (FDI). Demand for

land will rise from Japanese SMEs - as their government encourages them to relocate -

and from China, as it increasingly expands into ASEAN. We maintain our sales forecast

of 1,000 rai this year with 20% growth to 1,200 rai next year.

Increased power income = cushion in downturn. AMATA recently raised its direct

stake in upcoming power projects to 20% from 8-10% now. This means its power

exposure will increase to 256MW by 2019 from 78MW. This will give it both more profit

(more than 20% of net profit versus less than 10% now) and dividends. Resilient in

nature, the power investments will help cushion AMATA during the cyclic downturn of

land sales.

Strong 2H14 performance. It will release 3Q14 earnings on November 13 and we

expect this to show a return to a net profit of ~Bt100mn on more deed transfers (~100

rai versus 45 rai in 2Q14). 4Q14 performance will even better with more deed transfers

of 450-550 rai plus a one-time gain of Bt600-700mn from unlocking assets.

Positives in the pipeline: 1) Thai Chinese Rayong Industrial Realty Development (TC)

may buy more land from Amata City Co., as it is meeting strong demand from Chinese

expansion. 2) May list Amata B.Grimm Power. 3) Approval of the master plan for

Amata City Long Thanh by mid-2015. 4) The listing of Amata VN by 2H15. 5) potential

in “Quan Ninh” in northern Vietnam. 6) Possible award of a sizable project in Myanmar.

Maintain BUY. In our view, since its outlook is better, AMATA’s YTD share price

underperformance to the SET by 7% and HEMRAJ by 43% is not justified. AMATA

currently has large backlog of Bt4.5bn that secures earnings in 2H14 and 2015 – giving

it growth while other IE operators experience a contraction. With political calm

restored, several positive news items ahead will act as share price catalysts. Our PT is

unchanged at Bt20/share, implying an attractive total return of 33%. AMATA is worthy

of a BUY in our view.