Amata Corporation

Amata Corporation Plc (AMATA)  

Net profit beat our estimate by 43%!

AMATA posted a record net profit of Bt1,673m for 4Q14, up by 1,116% QoQ and 3,492% YoY. That made for an FY14 bottom-line jump of 50% YoY to Bt2,231m, which beat the consensus estimate by 43% and our projection by 54%. AMATA also announced a record DPS of Bt0.50 for 2H14, a 35% payout rate. Given that an interim Bt0.20/share dividend was paid in Dec, the FY14 DPS is Bt0.70, a 3.9% annualized yield (XD on April 29; payment on May 20).

Results highlights

The all-time high 4Q14 profit was driven by heavy land transference at AMATA’s fattest GM industrial park, Amata Nakorn. Of 644 rai transferred during 4Q14, 480 rai was at Nakorn, which pushed up operational GM to 58% (operational GM has averaged 49% in recent years) 4Q14 utilities and rental revenues were solid at Bt341 and Bt179m, respectively. FY14 utilities income rose 8% YoY to Bt1,359m and FY14 rental receipts jumped 21% YoY to Bt688m. On the other hand, 4Q14 profit from electricity generation dived 82% QoQ, due to a goodwill adjustment.

Outlook

Disappointing FY14 presales of 348 rai make for a modest Bt2bn backlog going into FY15. The implication is that AMATA doesn’t have enough bookings to generate core business income growth this year. But the firm’s first tranche of asset sales to a REIT in 2Q15 will add substantially to its bottom-line and the upcoming IPO of Amata VN (also due in 2Q15) will unlock the value of its Vietnamese subsidiary.

What’s changed?

As AMATA’s reoccurring income grew at a higher rate than expected, we have revised up our revenue assumptions for utilities, services and power to Bt1,472, Bt731 and Bt307m, respectively. We expect the utilities and rental businesses to grow solidly and Amata B.Grimm Power 4 to COD in Nov 2015. Our FY15 projections for presales and transference remain 1,000 rai and 1,200 rai, respectively. 

Recommendation

We have a TRADING BUY rating with an upgraded target price of Bt23.20, pegged to a PER of 14.4x, slightly below the AMATA’s long-term mean of 15.3x. The higher target price reflects an expanded expectation for recurring income. We believe that the spectacularly positive 4Q14 earnings surprise and big dividend will prompt players to bid up the share price in the short term—especially given the paucity of positive surprises for the market during this results season. 

Furthermore, we expect the asset spin-offs to the REIT and AMATA VN’s IPO in 2Q15 to boost trading interest. Note that we haven’t yet factored the two events into our model; they would mean about 60% upside to our current FY15 profit forecast.