Ananda Development

Ananda Development Plc (ANAN) 

 

Investment thesis

ANAN is the best play for a 1Q15 presales growth winner thanks to its successful launches last weekend. For the long-term investment horizon, it has a strong earnings growth profile with high visibility in FY16-17. It will deliver 20% core profit growth for FY16 and 15% for FY17, far above the 12% of our ResDev coverage firms for FY16 and 11% for FY17. Backlogs secure 65% of our FY16 residential revenue forecast and 59% for FY17. Our BUY rating stands, with a YE15 target price of Bt4.80, pegged to 12x PER (0.5SD above its long-term mean since its IPO in Dec 2012). 

Successful launches last weekend …

ANAN opened two sizable condos on March 21,2015, Ashton Chula-Silom (in 51% stake of a JV with Mitsui Fudosan, Bt8.7bn of total project value, mean selling price of  Bt210K/sq.m.) and Ashton Residence 41 (100% owned by ANAN, total value of Bt1.8bn, Bt230K/sq.m.). The responses were very strong (beating our estimate and ANAN’s budget). Residence 41 was fully booked and Chula-Silom signed 80% of opened units, implying that 64% of total project value was booked. The firm set aside 20% of Chula-Silom for foreign buyers. The greatly positive responses were mainly due to the projects’ prime locations (Figure 1). 

… lead developer to take sector presales growth crown

Extra weekend presales were Bt7.5bn, so we estimate total presales of Bt8bn in 1Q15, beating our earlier view of Bt6.9bn and amounting to a jump of 273% YoY and 44% QoQ—the top-second QoQ presales growth leadership among our coverage. Outstanding presales at Chula-Silom will drive management fees in 1Q15-2Q15 against a very low base set at only Bt19m in 1Q14 and Bt17m in 2Q14. Residence 41 will transfer in FY17, leading to a higher secured residential revenue forecast for FY17, from 37% to 59%. Chula-Silom will transfer in FY18.      

Two condos and new TH brand Arden to kick off in 2Q15

ANAN will open five projects with total value of Bt7.4bn in 2Q15: Ideo Q Chidlom (Bt2.5bn), UNiO (Bt1.5bn) and three THs under its new brand Arden at Rama 3 (Bt1.1bn), Ladprao 71 (Bt579m) and Pattanakarn (1.3bn). Assuming a 50% condo take-up rate and 20% for Arden, ANAN would post Bt3.2bn of presales in 2Q15, up 94% YoY. TH will quickly contribute revenue in FY15, UNiO in FY16 and Ideo Q Chidlom in FY17.

Achievable FY15 performance target 

The firm plans FY15 launch value of Bt32bn, doubling from its Bt15bn in FY14. Its FY15 presales growth target of 12% to Bt24bn is achievable based on a conservative condo take-up rate of 40%. ANAN’s FY15 residential revenue target is Bt10-11bn, up 3-14% YoY (Bt11bn in our model, 57% secured by presales backlog). The highest quarterly presales are ranked by 4Q15, 1Q15, 2Q15 and 3Q15 followed launch plan of Bt11bn in 4Q15, Bt10bn in 1Q15, Bt7bn in 2Q15 and Bt3bn in 3Q15.