Sansiri

Sansiri Plc (SIRI)   

 

The sell-out upon launch of The Line Jatujak-Mochit and The Monument Sanampao ensures higher presales QoQ in 2Q15 and underpins future earnings outlook. At current backlog levels, 2Q15 transfers are looking at growth of at least 25% QoQ. These positives are not yet in the share price, which remains clouded by macro concerns. Relief from this worry will bring the focus back to fundamentals, at which time investors will find that SIRI is undervalued. At last close, SIRI trades at an undemanding 2015 PBV of 1.0x PBV and PER of 7.8x on EPS growth of 27%. TTR is attractive at 36% and we reiterate BUY. 

 

The Line Jatujak-Mochit  sold out! Units moved better than expected, and all 841 worth Bt5.7bn in 

The Line Jatujak-Mochit, the JV project between SIRI and BTS, were sold on the launch weekend. This is far better than SIRI’s expectation of 30% sold. We believe this lies in the key selling point of this project i.e. its location near BTS Mochit and MRT Jatujak stations. The project is located on about four rai of land (7,600 sqm) and comprised of one 43-storey building with 841 units. The units are sized at 25.25-105.75 sqm (1-3 bedrooms) with prices starting at Bt4mn/unit (Bt158K/sqm). The project will be completed and income booked in late 2017-early 2018. This adds to the mid-May sale upon launch of all 86 units worth Bt1.5bn (Bt265K/sqm) in The Monument Sanampao.

 

Stronger than expected response from overseas. 

 

The Line was launched simultaneously in three countries – Thailand, Hong Kong and Singapore –and met better response in Hong Kong and Singapore than expected, where buyers took 111 units (13% of the total). Visitors to the two-day event numbered ~1,500, many times SIRI’s previous record of only a few hundred visitors. This indicates SIRI’s name is recognized in foreign markets and suggests more overseas activities in the future. 

 

Stronger presales QoQ in 2Q15. The strong weekend presales guarantee a rise in presales in 2Q15. Thus far in second quarter, its presales are at Bt9.5bn, exceeding 1Q15 presales of Bt3.2bn and bringing YTD presales to Bt12.7bn, accounting for 39% of its revised forecast (Bt33bn). Of the Bt12.7bn in presales, Bt8.4bn (49% of its full year target) were condos and Bt4.3bn (28% of its target) low-rise. This has raised backlog to Bt41.8bn, securing 82% of 2015.   

 

… and higher profit. On current backlog it expects revenue growth of at least 25% QoQ to Bt7.8bn in 2Q15. This is backed by transfers at three new condos: the Bt2.0bn dcondo Karnjanavanich

 

 (Hat Yai), the Bt893mn dcondo Hyde (Chiang Rai) and the Bt2.7bn NYE by Sansiri (Wongwian Yai, Bangkok). It will release results in mid-August.   

 

Maintain BUY. At last close, SIRI is trading at an undemanding 1.0x PBV and 7.8x PER with respective 27% EPS growth (based on full dilution). Risk to our call is a slower recovery of the economy than expected, lower presales and gross margin and/or higher SG&A expenses than estimated.