Pruksa Real Estate

Pruksa Real Estate Plc (PS)   

- Income, presales targets at 12% and 20% in 2015     

 

PS targets income at B47bn (growing 12%yoy) and presales at B47bn (growing 20%yoy) in 2015. Having 177 available-for-sale projects valued B78.5bn at the end of 2014, the company plans to launch 70-75 new projects (60-63 horizontal projects and 10 condominiums) valued B55-61bn in 2015 (versus 62 new projects valued B57bn in 2014). PS also focuses on more efficient expense control in order to boost gross margin over 35% e.g. purchasing material for many projects at once, using REM system on condominiums, and using precast products on 30-storey condominiums. Business cycle of horizontal projects is expected to decrease from 87 days in 2014 to 85 days in 2015 as new precast concrete factory would raise PS's capacity from 640 units/month to 1,120 units/month.  

 

- Higher-than-expected transfer in 2014. Revise up earnings forecast by 3%     

 

FY2014 income is projected to exceed the target of B42bn slightly; profit is expected to make the year's high in 4Q14 thanks to high transfer of condominiums. We revise up PS's earnings forecast by 3% to B6.7bn (growing 15%yoy) in 2014 to reflect high transfer, but maintain our forecast at B7.5bn (growing 12%yoy) in 2015. PS's current backlog of B23bn makes up 49% of full-year income target. However, as most customers are mid-low incomers that depend on housing loans from commercial banks, rejection rate might increase from 19% as household debt has been increasing. 

 

- Fair value is B40.52, 2.8% dividend yield   

 

With superior competitiveness, PS wins the largest market share among peers. P/E ratio of 9.3x is lower than the past average. We maintain the fair value at B40.52, with P/E 12x ratio. Dividend is expected at B0.95 or 2.8% dividend yield (paid annually).