Bualuang Securities October 8, 2012 6:00 pm
Pruksa Real Estate Plc (PS)Presales of THB20.7bn in 9M12 account for 71% of PS's FY12 target, beating its original guidance of 65%. 3Q12's presales show consistent recovery in TH and SDH, key contributors to revenue. The strong backlog also brightens its sales and earnings visibility. Our EPS estimates are unchanged pending 3Q12 results. PS's target price, now higher on a valuation roll forward, is based on 10x CY14 P/E, still 1SD above mean for being Thailand's largest developer by sales and its TH market dominance. We believe the stronger FY13 outlook has not been fully factored in by the market. Reiterate Outperform.
What Happened
PS reported favourable 3Q12 presales of THB8bn, with resilient growth of 4% yoy and 14% qoq. PS's core competency TH remained the key driver (+34% yoy and +21% qoq), contributing 56% to 3Q12 presales. 9M12 presales were THB20bn, down 18% yoy but already accounting for 71% of PS's FY12 target (better than its guidance of 65% at the beginning of the year). 9M12's figure was 48% backed by TH, while SDH and condo contributed 27% and 24%, respectively, to the total number. PS launched six new (mainly TH) projects in 3Q12 worth approx. THB2.8b, and it plans to launch another 20-21 new projects (including one new condo) worth approx. THB12.8bn in 4Q12.
What We Think
PS's presales in 3Q12 and 9M12 augur well for its improving revenue and earnings visibility. Given that more than 85% of revenue is normally generated through shortbusiness cycle TH/SDH, solid signs of a presale recovery are crucial for its growth prospects. 9M12's backlog, estimated at THB34bn, will turn into revenue over FY12-15. Our FY12 sales revenue estimate is 107percent secured, while FY13 is 43% and FY14 is 20% locked in. These numbers also give us confidence to maintain our above-consensus earnings estimates,with expected growth of 37% in FY13, after a 39% increase in FY12.
What You Should Do
Stay invested. PS remains one of our top picks with its attractive valuation at 7.7x CY13 P/E and 7.2x CY14 P/E vs. peer average of 11x and 10x respectively, supported by recovery driven rerating. Near-term catalysts are sequential rise in quarterly earnings, and upward revisions by the market.
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Source: http://www.nationmultimedia.com/business/Pruksa-Real-Estate-30191921.html
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