RESIDENTIAL PROPERTY

RESIDENTIAL PROPERTY

 

Investment thesis

The AREA monthly survey in Nov was in line with our earlier view on lower unit launches but better take-up rates. Thus, we have reiterated our forecast on an aggregate presales and core earnings jump in 4Q15 to post in Feb 2016 (preliminary sector presales growth forecast of 43% YoY and 30% QoQ: potential record core profit). Then, ResDev stocks will offer attractive dividend yields in Mar 2016. Thus, ResDev stocks will rebound strongly in Jan-Mar 2016. The valuations downside is limited at FY16 PER of only 8.3x, which is near its last trough in 2010-2011 and far below 10.8x of its FY06-15 mean. We prefer ANAN, LH and LPN on the high conviction of promising FY16 core profit growth.

Fewer new unit launches in Nov were expected

The survey indicated that new-unit launches declined 19% MoM to 9,066 units in Nov. However, the new launch value rose 19% MoM to Bt54bn boosted by high-end launch of SDHs and condos, and mid-end for THs.  New unit launch slippage MoM was due to SDHs and condos. Condo new unit launches plunged 51% MoM to 3,979 units on the high base set in Oct (the highest monthly number since Nov 2014). SDH’s new unit launches slid 13% MoM to 1,561 units, but value rose 13% due to high-end SDHs launches. THs’ new unit launches soared 226% MoM to 3,526 units (the highest monthly launch since May 2014). Listed-firms have resumed higher market share from 52% in Oct to 76% in Nov.  

The breakdown of launches was 44% condos; 39%, TH; and, 17%, SDH. The mean launch sales price jumped 47% MoM to Bt6.0m/unit due to the higher proportion of high-end SDHs and condos. New THs in Nov were mostly mid-end against low-end properties in Oct. The mean SDH sales price jumped 30% MoM to Bt12m/unit led high-end houses from LH, A and non-listed firms. The mean condo launch sales price rose 107% MoM to Bt6.5m/unit due to more upper-mid to high-end condos released by ANAN, RML, SC, SPALI and a non-listed firm. 

Good Nov take-up rate thanks to condo market

In line with forecasts, the overall take-up rate improved from 23% in Oct to 24% in Nov. Condo take-up rate rose from 26% in Oct to 35% in Nov thanks to the better take-up rate for condos price at Bt1m-5m/unit. Despite larger new THs, the mean take-up rate was not bad at 18% in Nov (only slightly down from 19% in Oct). Only new SDHs have a slow mean take-up rate from 14% in Oct 11% in Nov.  

Subdued activity expected in Dec 

We expect fewer new launches MoM in Dec 2015 on seasonality—quiet launch activities as usual during the month of the festive season which winds up with the new year holiday. The mean take-up rate of new launches in Dec should drop MoM—flattish MoM in the best case due to low base set of take-up rate in Nov. New low-rise projects (SDH and TH) are expected to decline MoM due to high base set by Nov particularly for new THs. New condos in Dec should mainly be driven by non-listed firms. Of our coverage, there are no new significant launches in Dec.