Land & Houses
Play
BUY for steadily growing profit, high yield BUY
Land & Houses Plc (L&H)
- Focusing more on horizontal projects, presales, income
LH is looking for steady growth this year, aiming to boost presales by
8%yoy to B34bn. The company intends to focus more on horizontal
projects; horizontal projects, townhomes, and condominiums are expected
to make up 65% (up from 60%), 30% (down from 35%), and 5% of LH's
income, respectively. LH plans to launch new 14 horizontal projects and
only three condominiums at the total value of B37bn (dropping 10.4%yoy)
in 2015. It currently has projects valued B70bn available for sale. Income
from property sales is targeted at B28bn in 2015, 80% from horizontal
projects and 20% from condominiums, improving from 2014 (slightly higher
than the target of B25bn). B5.2bn backlog is expected to generate income
in 2015, mainly from many condominiums that will be ready to make money
this year. LH plans to invest total B12bn in properties (lands and buildings):
B8bn in for-sale projects and B4bn in for-rent projects, as well as over
US$70m in a service apartment in San Francisco, US.
- Normalized profit to grow 8%p.a in 2014-2015
4Q14 profit is projected to make the peak of 2014 because selling of
Terminal 21 valued B6.1bn to REIT would generate over B1.5bn
extraordinary profit. Overall, LH's earnings are estimated at B8.5bn
(growing 30%yoy), and its normalized profit is expected at B7bn (increasing
8%yoy) in 2014. LH plans to sell more assets to REIT; selling of these three
service apartments are currently under consideration: Grande Centre Point
Terminal 21, Grand Centre Point Ploenchit, and Grande Centre Point
Ratchadamri. FY2015 normalized profit is projected at B7.5bn, growing
8%yoy, mainly from for-sale properties and higher share of profit from
associates: HMPRO, QH, and LHBANK; extraordinary profit from assets
selling to REIT is not included in our forecast yet.
- BUY for 10% upside, 6.6% dividend yield
LH's share price has dropped and shown 10% upside, with 6-7% dividend
yield. FY2015 fair value (sum of the part method) is B10.09. We upgrade
our recommendation from HOLD to BUY.
