Pruksa Real Estate
Play
Good and inexpensive BUY
New projects to boost pre-sales in 2015
PS's 11M14 pre-sales of B37.2bn (B27bn from horizontal projects, B10.2bn
from condominiums) were the largest among the housing sector, but still far
from the target of B43bn. In 2015, PS aims to win larger market share and
prepare for the AEC liberalization by expanding its new business to uppermiddle
class and outside Bangkok, focusing on border areas and special
economic zones (Chiang Rai, Tak, Trat, Sakaeo, and Songkla); this would
raise PS’s income from other provinces from 7% to 8-9% of total income.
After 62 projects worth of B58bn were launched in 2014, PS initially plans to
launch new 70 projects valued B70bn in 2015, projected to boost presales
by at least 20%.
- New factories, high backlog to boost profit by 15.5% in 2015
FY2015 income is estimated to grow 8%yoy and reach the target of B42bn.
4Q14 net profit is projected to make the year's peak because B12bn backlog
will generate income in this quarter. FY2015 profit is expected to exceed our
projection of B6.5bn. PS is likely to grow rapidly in 2015 as its new precast
concrete factories (PCF6 and PCF7) already started its commercial run in
4Q14, possibly working at its full capacity of 480 units/month and raising
PS's total capacity to 1,120 units/month in 2015 (PCF1-5 are currently
working at 113% of their actual capacity). PS has B39bn backlog now;
B16.3bn of which will generate income in 2015. Overall, FY2015 profit is
projected to grow by 15.5%yoy and reach B7.5bn.
- 8.5x P/E ratio, 41% upside, 3.3% dividend yield
Despite strong earnings, PS is currently underperforming the market,
having 41% upside and P/E ratio as low as 8.5x; it is advisable to buy PS.
We derive PS's fair value (12x P/E ratio) at B40.52. PS is expected to pay
dividend in early 2015 at B0.95/share (3.3% dividend yield, paid annually).
