Amata Corporation

Amata Corporation Plc (AMATA)

AMATA is looking outward, with a new 5-year business plan focusing on rapidly-growing Vietnam and Myanmar, with a goal of contribution of 25-30% within five years. Land sales will be better HoH in 2H16, backed by big-lot sales in the pipeline and extraordinary profit of Bt60-70mn for RBF sales. This plus cheap valuation will be near term share price catalysts. BUY, with an unchanged SOTP target price of Bt21.

 

Five-year plan. AMATA unveiled a five-year business plan (2016-2020) with revenue growth of 12-13% p.a. Most will be from land sales (60-75%), with recurring income at 25-40%. It expects 70-75% of revenue to come from Thailand and 25-30% from overseas (Vietnam 20-25% and Myanmar 5%), the highest of peers. This is a good diversification that will enable it to get in on the fast-growing economies of neighboring countries. 

 

Industrial estate outlook in Thailand. The vote to accept the draft constitution has lifted the clouds from the investment climate and AMATA expects positive FDI ahead. The better climate is seen in the fact the BoI has raised its target applications by 18% to Bt550bn this year (Bt320bn, or 58% of its target, in 1H16). AMATA is positioned to gain from the Eastern Economic Corridor development (EEC), which aims to boost investment in Chonburi, Rayong and Chachengsao by raising corporate tax benefit (to 13 years from 8) and higher expense deduction plus relaxation of foreign currency repatriation rules. The government plans to build infrastructure to support logistics.

 

Maintain land sales target. AMATA still targets land sales of 1,000 rai though it sold only 280 rai in 1H16, believing it has enough potential buyers in the pipeline to achieve target, as interest has heightened. Potential customers are from Japan, China and India and are in the supply chains of various sectors, including food and medical products. We maintain our 2016 forecast at 827 rai.  

 

Potential extraordinary profit in 2H16. Thai-Chinese JV, in which AMATA holds 46% (direct and indirect), plans to sell 11,000 sqm in ready built factories (RBF) to tenants, in 2H16. We estimate gain of Bt60-70mn for AMATA. It is also studying selling RBF in Amata Nakorn and Amata City Bien Hoa to AMATAR, but probably not this year. 

 

Overseas

 

Vietnam:

 

- AMATA, with 73.2% in AMATAV, will focus on Vietnam, whose market is large and economic growth strong. AMATAV has received three investment certificates - for Amata City HighTech, Amata City Mega Township and part of Amata City Service Township (Long Thanh project) with combined total area of 1,219 ha (7,618 rai). It has already acquired 70% of the land for Amata City High Tech. This implies revenue contribution will start next year as planned. AMATAV also has a project in Halong district, in the northern part of Vietnam, with total area of 5,800 ha (36,250 rai).

 

Myanmar:

 

- AMATA is studying industrial estate investment in Myanmar and expects to show some progress by year-end. Wholly-owned Amata Global Pte. Ltd, AMATA’s overseas investment arm, is to hold 100% in the recently set up Amata

 

Myanmar Pte., Ltd., which will develop an industrial park in Myanmar. We have not included Halong and Myanmar projects in our forecast as they are in early stages.