AP: 3Q15 core profit likely to have fallen YoY ...
AP (Thailand) Buy (16E TP Bt7.70)
Company Update
Close Bt6.10
Property Development October 26, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
3Q15 core profit likely to have fallen YoY and QoQ Price Performance (%)
Source: SET Smart
FY15
FY16
Consensus EPS (Bt)
0.885
0.950
KT ZMICO vs. consensus Share data
‐2.8%
2.1%
Reuters / Bloomberg
AP.BK/AP TB
Paid‐up Shares (m)
3,145.90
Par (Bt)
1.00
Market cap (Bt bn / US$ m) Foreign limit / actual (%)
19.00/540.00 30.00/26.79
52 week High / Low (Bt)
7.80/4.98
Avg. daily T/O (shares 000)
12,624.00
NVDR (%)
13.30
Estimated free float (%)
63.97
Beta
1.14
URL
www.apthai.com
CGR
Anti‐corruption
Level 2 (Declared)
Worarat Powpaka Analyst, no. 17992 [email protected] 66 (0) 2624‐6248
Maintain “BUY” with 2016E target price at Bt7.70/share We maintain the 2016E target price for AP at Bt7.70 pegged with 8x PER and maintain Buy as we expect AP’s core profit to pick up in 4Q15 thanks to an anticipated QoQ increase in its transfer revenue. We also anticipate that its 1Q16 core earnings will fully benefit from the recently announced stimulus measures aimed at boosting the property sector. 9M15 presales account for 79% of the company’s target AP reported 3Q15 presales at Bt5bn (‐38.5% YoY, ‐60.0% QoQ) as it opened five low‐rise projects (Bt4.9bn, sold 11%) and one condo (Aspire Erawan Phase I (Bt3.5bn, sold 8%). However, the total presales achieved during 9M15 amounted to Bt22.3bn, which accounts for 79% of the firm’s target of Bt28.3bn (+27.6% YoY), the highest level in the sector. Core profit to have declined YoY and QoQ We forecast AP’S 3Q15 core profit at Bt627mn (‐39.3% YoY, ‐0.3% QoQ). Its transfer revenue may have dropped to Bt5.4bn (‐28.7% YoY, +2.3% QoQ) as customers delayed decisions to buy and transfer housing units while awaiting the stimulus package from the government. Also, its condo backlog available for transfer was smaller than the amount seen last year. However, we project a 3Q15E net profit of Bt750mn (‐27.6% YoY, +16.6% QoQ) on the booking of extra before‐tax gain of Bt153mn from the sale of a subsidiary (AP Ekkamai) to the JV company. 4Q15E core profit to mark the high point for the year We expect AP’s core profit to peak in 4Q15E, which should be boosted largely by the expected strong transfer revenue from both low‐rise and high‐rise projects thanks to the potentially positive outcome of the measures designed to stimulate the property sector. Two new completed condo projects in 4Q15 (Bt1.3bn, 53% sold) will also help to boost the firm’s transfer revenue growth in 4Q15. Cut 2015E core profit forecast by 9.7% but maintain 2016E forecast We revised down our 2015‐16E transfer revenue estimates by 6.2% and 1.3%, respectively. Such downward revisions are mainly due to low‐rise transfers being lower than the previous forecast. We also cut 2015‐16E transfer expenses by 25.6% and 33.8%, respectively, from the previous projections (due to the cut in transfer fees from 1% to 0.01% from 19 Oct 15 to 30 Apr 16). This brought the 2015E core profit down by 9.7% and the 2015E net profit down by 5.5%. Nevertheless, we maintain the 2016E core profit as the lower transfer forecast will be offset by the lower SG&A estimate from the transfer fee cut. Financials and Valuation FY Ended 31 Dec Revenues (Btm) Net profit (Btm) EPS (Bt) EPS growth (%) Core EPS (Bt) Core EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) Normalized PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2012 17,310 2,186 0.77
2013 19,989 2,013 0.70
2014 23,149 2,615 0.83
2015E 23,140 2,705 0.86
2016E 23,591 3,041 0.97
39.6
(8.3)
0.72
0.70
18.1
3.4
12.4
0.83
0.82
32.7
0.97
(3.1)
18.3
(1.7)
18.4
0.25 4.45 2012 7.9 8.4 9.3 1.4 4.1 17.2 91.0
0.25 4.90 2013 8.7 8.7 10.7 1.2 4.1 14.4 103.8
0.38 5.04 2014 7.3 7.3 9.0 1.2 6.2 16.5 89.9
0.34 5.63 2015E 7.1 7.5 8.8 1.1 5.6 15.3 83.3
0.39 6.25 2016E 6.3 6.3 8.6 1.0 6.3 15.5 74.3
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Quarterly earnings preview Profit and Loss (Btmn)
FY Ended 31 Dec
3Q14
2Q15
3Q15E
% YoY
% QoQ
9M15E
% YoY
2015E
% YoY
Revenue from project sales Total revenue Gross profit
7,583 7,641 2,584
5,283 5,402 1,895
5,404 5,474 1,870
(28.7) (28.4) (27.7)
2.3 1.3 (1.3)
15,852 16,096 5,536
(6.4) (5.8) (3.6)
22,686 23,140 7,890
(1.1) (0.0) 0.6
YTD (% 2015E) 69.9 69.6 70.2
EBITDA
1,344
943
924
(31.3)
(2.0)
2,682
(4.8)
3,865
3.8
69.4
(89)
(89)
(80)
(10.4)
(9.7)
(239)
(3.7)
(355)
3.2
67.3
11
57
20
82.4
(64.8)
96
155.3
105
121.3
92.0
(190)
(176)
(163)
(14.2)
(7.2)
(493)
7.9
(676)
7.9
72.9
2
17
153
7,186
817.9
170
7,979
170
7,978
100.0
Interest expense Other income Income tax Other extraordinary Items
(16)
(55)
(65)
302.2
19.2
(134)
198.3
(250)
280.9
72.2
Net profit (loss)
1,036
643
750
(27.6)
16.6
1,952
(2.7)
2,705
3.4
72.2
Core net profit (loss)
1,033
629
627
(39.3)
(0.3)
1,816
(9.4)
2,569
(1.7)
70.7
Reported EPS (THB)
0.36
0.20
0.24
(34.2)
16.6
0.62
(11.6)
0.86
3.4
72.2
Core EPS (THB)
0.36
0.20
0.20
(44.8)
(0.3)
0.58
(17.6)
0.82
(1.7)
70.7
Gross margin – project sales (%)
33.5
33.8
33.4
33.6
33.0
Gn (Ls) from affiliates
Gross margin ‐ overall (%)
33.8
35.1
34.2
34.4
34.1
EBITDA margin (%)
17.6
17.5
16.9
16.7
16.7
Net margin (%)
13.6
11.9
13.7
12.1
11.7
Current ratio (x)
3.7
3.8
‐
‐
4.0
Interest coverage (x)
14.9
11.3
11.3
11.0
10.7
Debt / equity (x)
1.3
1.3
‐
‐
1.1
BVPS (Bt)
5.35
5.16
‐
‐
5.63
ROE (%)
20.1
17.4
‐
‐
15.3
Source: AP, KT ZMICO Research
Figure 2: Major forecast revisions Btmn
Old 2015E 2016E
New 2015E 2016E
% Change 2015E 2016E
Remark
Residential sales
24,195
23,379
22,686
23,083
(6.2)
(1.3)
Decreases slightly along with lower low‐rise transfers
Low rise
12,982
14,160
12,252
13,086
(5.6)
(7.6)
Low‐rise transfers were lower than previous forecast
High rise
11,213
9,219
10,434
9,997
(6.9)
8.4
Some high‐rise transfers were shifted to 2016E
Transfer fee
242
234
180
155
(25.6)
(33.8)
Transfer fee cut to 0.01% from 1% for 6 months (18 Oct 15‐30 Apr 16)
Special Business Tax
798
772
749
762
(6.2)
(1.3)
Decreases along with transfers
Selling expenses
4,369
4,361
4,168
4,259
(4.6)
(2.3)
Decreases along with transfers & transfer fee cut
Core profit
2,847
3,041
2,569
3,041
(9.7)
0.0
Net profit
2,863
3,040
2,705
3,041
(5.5)
0.0
Source: AP, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: Major assumptions Revenue Residential Low rise High rise Service income Total Equity gain (loss) from JVs Growth (%) Residential Low rise High rise Service income Total Equity gain (loss) from JVs GPM (%) Residential overall Service income Total NPM
2011
2012
2013
2014
2015E
2016E
13,541 6,359 7,182 97 13,638 0.0
17,197 9,324 7,872 113 17,309 0.0
19,854 10,092 9,761 134 19,987 (1.3)
22,941 11,700 11,241 208 23,149 (65.6)
22,686 12,252 10,434 454 23,140 (250.0)
23,083 13,086 9,997 508 23,591 268.5
(1.1) (1.7) (0.6) (34.3) (1.5) ‐
27.0 46.6 9.6 15.9 26.9 ‐
15.5 8.2 24.0 18.9 15.5 N.M.
15.5 15.9 15.2 54.7 15.8 N.M.
(1.1) 4.7 (7.2) 118.7 (0.0) N.M.
1.7 6.8 (4.2) 11.8 1.9 N.M.
37.7 0.0 38.2 11.4
34.4 0.0 34.9
33.3 76.3 33.6
33.5 74.4 33.9
33.0 75.0 34.1
33.0 75.0 34.2
12.6
10.1
11.3
11.7
12.9
Source: AP, KT ZMICO Research
Figure 3: Presales
Figure 4: Backlog at end 2Q15
Btmn 25,000
2017 2,237
20,000 15,000 10,000
2016 3,449
5,000
Total Backlog Bt15,434mn 2015 9,784
-
Low rise
High rise
Source: AP, KT ZMICO Research
Source: AP, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
FINANCIAL TABLE PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Forex gain (loss) Extra Items Gain (loss) from affiliates Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btmn) Net income Forex and other extraordinary adjustments Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin ‐ residential (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2012 17,310 (11,273) 6,036 (3,128) 3,104 152 2,952 (213) 67 2,877 (691) 0 121 0 2,186 0.77 0.77 2,064 0.72 0.25
2013 19,989 (13,270) 6,718 (3,944) 2,991 159 2,832 (293) 58 2,552 (539) 0 5 (1) 2,013 0.70 0.70 2,009 0.70 0.25
2014 23,149 (15,304) 7,845 (4,140) 3,725 84 3,641 (344) 159 3,242 (627) 0 2 (66) 2,615 0.83 0.83 2,613 0.83 0.38
2015E 23,140 (15,251) 7,890 (4,168) 3,865 79 3,786 (355) 145 3,382 (676) 0 170 (250) 2,705 0.86 0.86 2,569 0.82 0.34
2016E 23,591 (15,517) 8,073 (4,259) 3,927 62 3,865 (351) 51 3,802 (760) 0 0 269 3,041 0.97 0.97 3,041 0.97 0.39
2012 744 108 26,490 262 1,411 29,472 4,209 8,073 16,792 2,848 12,680 29,472
2013 889 110 30,784 550 1,375 34,410 5,059 10,371 20,402 2,860 14,007 34,410
2014 463 96 31,673 770 1,503 35,564 4,431 10,274 19,715 3,146 15,848 35,564
2015E 100 124 33,902 764 1,475 37,759 4,130 10,724 20,052 3,146 17,707 37,759
2016E 752 126 35,915 750 1,154 40,345 3,150 12,224 20,678 3,146 19,667 40,345
2012 2,186 (571) 152 724 2,492 173 42 216 (1,959) 66 (509) 0 (2,401) 306 2,914 1.02
2013 2,013 (422) 159 (4,419) (2,669) (95) 6 (89) 3,589 29 (715) 0 2,903 145 (2,331) (0.82)
2014 2,615 (181) 84 (1,563) 956 (433) 552 119 (729) 0 (772) 0 (1,501) (426) 1,280 0.41
2015E 2,705 263 79 (1,639) 1,408 (550) (4) (554) 149 0 (818) (548) (1,217) (363) 1,359 0.43
2016E 3,041 (252) 62 (1,757) 1,095 (300) 0 (300) 520 0 (1,082) 420 (143) 652 1,045 0.33
2012 26.9 12.6 39.6 34.9 17.9 17.1 12.6 11.9 24.0
2013 15.5 (3.6) (8.3) 33.6 15.0 14.2 10.1 10.0 21.1
2014 15.8 24.5 18.1 33.9 16.1 15.7 11.3 11.3 19.3
2015E (0.0) 3.8 3.4 34.1 16.7 16.4 11.7 11.1 20.0
2016E 1.9 1.6 12.4 34.2 16.6 16.4 12.9 12.9 20.0
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO is a partnership between KTB and ZMICO. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, KBS, PSL, SVH, VNG, ZMICO, CPI . KT ZMICO is a financial advisor for U, LOXLEY, SUTHA, ZMICO, MAKRO, CPALL, PLE, SAFARI, PACE, TPOLY, TFG. KT ZMICO is a co‐underwriter of KOOL, ORI, SCI, SR.
Anti‐corruption Progress Indicator
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
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Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Company Update
Close Bt6.10
Property Development October 26, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
3Q15 core profit likely to have fallen YoY and QoQ Price Performance (%)
Source: SET Smart
FY15
FY16
Consensus EPS (Bt)
0.885
0.950
KT ZMICO vs. consensus Share data
‐2.8%
2.1%
Reuters / Bloomberg
AP.BK/AP TB
Paid‐up Shares (m)
3,145.90
Par (Bt)
1.00
Market cap (Bt bn / US$ m) Foreign limit / actual (%)
19.00/540.00 30.00/26.79
52 week High / Low (Bt)
7.80/4.98
Avg. daily T/O (shares 000)
12,624.00
NVDR (%)
13.30
Estimated free float (%)
63.97
Beta
1.14
URL
www.apthai.com
CGR
Anti‐corruption
Level 2 (Declared)
Worarat Powpaka Analyst, no. 17992 [email protected] 66 (0) 2624‐6248
Maintain “BUY” with 2016E target price at Bt7.70/share We maintain the 2016E target price for AP at Bt7.70 pegged with 8x PER and maintain Buy as we expect AP’s core profit to pick up in 4Q15 thanks to an anticipated QoQ increase in its transfer revenue. We also anticipate that its 1Q16 core earnings will fully benefit from the recently announced stimulus measures aimed at boosting the property sector. 9M15 presales account for 79% of the company’s target AP reported 3Q15 presales at Bt5bn (‐38.5% YoY, ‐60.0% QoQ) as it opened five low‐rise projects (Bt4.9bn, sold 11%) and one condo (Aspire Erawan Phase I (Bt3.5bn, sold 8%). However, the total presales achieved during 9M15 amounted to Bt22.3bn, which accounts for 79% of the firm’s target of Bt28.3bn (+27.6% YoY), the highest level in the sector. Core profit to have declined YoY and QoQ We forecast AP’S 3Q15 core profit at Bt627mn (‐39.3% YoY, ‐0.3% QoQ). Its transfer revenue may have dropped to Bt5.4bn (‐28.7% YoY, +2.3% QoQ) as customers delayed decisions to buy and transfer housing units while awaiting the stimulus package from the government. Also, its condo backlog available for transfer was smaller than the amount seen last year. However, we project a 3Q15E net profit of Bt750mn (‐27.6% YoY, +16.6% QoQ) on the booking of extra before‐tax gain of Bt153mn from the sale of a subsidiary (AP Ekkamai) to the JV company. 4Q15E core profit to mark the high point for the year We expect AP’s core profit to peak in 4Q15E, which should be boosted largely by the expected strong transfer revenue from both low‐rise and high‐rise projects thanks to the potentially positive outcome of the measures designed to stimulate the property sector. Two new completed condo projects in 4Q15 (Bt1.3bn, 53% sold) will also help to boost the firm’s transfer revenue growth in 4Q15. Cut 2015E core profit forecast by 9.7% but maintain 2016E forecast We revised down our 2015‐16E transfer revenue estimates by 6.2% and 1.3%, respectively. Such downward revisions are mainly due to low‐rise transfers being lower than the previous forecast. We also cut 2015‐16E transfer expenses by 25.6% and 33.8%, respectively, from the previous projections (due to the cut in transfer fees from 1% to 0.01% from 19 Oct 15 to 30 Apr 16). This brought the 2015E core profit down by 9.7% and the 2015E net profit down by 5.5%. Nevertheless, we maintain the 2016E core profit as the lower transfer forecast will be offset by the lower SG&A estimate from the transfer fee cut. Financials and Valuation FY Ended 31 Dec Revenues (Btm) Net profit (Btm) EPS (Bt) EPS growth (%) Core EPS (Bt) Core EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) Normalized PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2012 17,310 2,186 0.77
2013 19,989 2,013 0.70
2014 23,149 2,615 0.83
2015E 23,140 2,705 0.86
2016E 23,591 3,041 0.97
39.6
(8.3)
0.72
0.70
18.1
3.4
12.4
0.83
0.82
32.7
0.97
(3.1)
18.3
(1.7)
18.4
0.25 4.45 2012 7.9 8.4 9.3 1.4 4.1 17.2 91.0
0.25 4.90 2013 8.7 8.7 10.7 1.2 4.1 14.4 103.8
0.38 5.04 2014 7.3 7.3 9.0 1.2 6.2 16.5 89.9
0.34 5.63 2015E 7.1 7.5 8.8 1.1 5.6 15.3 83.3
0.39 6.25 2016E 6.3 6.3 8.6 1.0 6.3 15.5 74.3
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Quarterly earnings preview Profit and Loss (Btmn)
FY Ended 31 Dec
3Q14
2Q15
3Q15E
% YoY
% QoQ
9M15E
% YoY
2015E
% YoY
Revenue from project sales Total revenue Gross profit
7,583 7,641 2,584
5,283 5,402 1,895
5,404 5,474 1,870
(28.7) (28.4) (27.7)
2.3 1.3 (1.3)
15,852 16,096 5,536
(6.4) (5.8) (3.6)
22,686 23,140 7,890
(1.1) (0.0) 0.6
YTD (% 2015E) 69.9 69.6 70.2
EBITDA
1,344
943
924
(31.3)
(2.0)
2,682
(4.8)
3,865
3.8
69.4
(89)
(89)
(80)
(10.4)
(9.7)
(239)
(3.7)
(355)
3.2
67.3
11
57
20
82.4
(64.8)
96
155.3
105
121.3
92.0
(190)
(176)
(163)
(14.2)
(7.2)
(493)
7.9
(676)
7.9
72.9
2
17
153
7,186
817.9
170
7,979
170
7,978
100.0
Interest expense Other income Income tax Other extraordinary Items
(16)
(55)
(65)
302.2
19.2
(134)
198.3
(250)
280.9
72.2
Net profit (loss)
1,036
643
750
(27.6)
16.6
1,952
(2.7)
2,705
3.4
72.2
Core net profit (loss)
1,033
629
627
(39.3)
(0.3)
1,816
(9.4)
2,569
(1.7)
70.7
Reported EPS (THB)
0.36
0.20
0.24
(34.2)
16.6
0.62
(11.6)
0.86
3.4
72.2
Core EPS (THB)
0.36
0.20
0.20
(44.8)
(0.3)
0.58
(17.6)
0.82
(1.7)
70.7
Gross margin – project sales (%)
33.5
33.8
33.4
33.6
33.0
Gn (Ls) from affiliates
Gross margin ‐ overall (%)
33.8
35.1
34.2
34.4
34.1
EBITDA margin (%)
17.6
17.5
16.9
16.7
16.7
Net margin (%)
13.6
11.9
13.7
12.1
11.7
Current ratio (x)
3.7
3.8
‐
‐
4.0
Interest coverage (x)
14.9
11.3
11.3
11.0
10.7
Debt / equity (x)
1.3
1.3
‐
‐
1.1
BVPS (Bt)
5.35
5.16
‐
‐
5.63
ROE (%)
20.1
17.4
‐
‐
15.3
Source: AP, KT ZMICO Research
Figure 2: Major forecast revisions Btmn
Old 2015E 2016E
New 2015E 2016E
% Change 2015E 2016E
Remark
Residential sales
24,195
23,379
22,686
23,083
(6.2)
(1.3)
Decreases slightly along with lower low‐rise transfers
Low rise
12,982
14,160
12,252
13,086
(5.6)
(7.6)
Low‐rise transfers were lower than previous forecast
High rise
11,213
9,219
10,434
9,997
(6.9)
8.4
Some high‐rise transfers were shifted to 2016E
Transfer fee
242
234
180
155
(25.6)
(33.8)
Transfer fee cut to 0.01% from 1% for 6 months (18 Oct 15‐30 Apr 16)
Special Business Tax
798
772
749
762
(6.2)
(1.3)
Decreases along with transfers
Selling expenses
4,369
4,361
4,168
4,259
(4.6)
(2.3)
Decreases along with transfers & transfer fee cut
Core profit
2,847
3,041
2,569
3,041
(9.7)
0.0
Net profit
2,863
3,040
2,705
3,041
(5.5)
0.0
Source: AP, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: Major assumptions Revenue Residential Low rise High rise Service income Total Equity gain (loss) from JVs Growth (%) Residential Low rise High rise Service income Total Equity gain (loss) from JVs GPM (%) Residential overall Service income Total NPM
2011
2012
2013
2014
2015E
2016E
13,541 6,359 7,182 97 13,638 0.0
17,197 9,324 7,872 113 17,309 0.0
19,854 10,092 9,761 134 19,987 (1.3)
22,941 11,700 11,241 208 23,149 (65.6)
22,686 12,252 10,434 454 23,140 (250.0)
23,083 13,086 9,997 508 23,591 268.5
(1.1) (1.7) (0.6) (34.3) (1.5) ‐
27.0 46.6 9.6 15.9 26.9 ‐
15.5 8.2 24.0 18.9 15.5 N.M.
15.5 15.9 15.2 54.7 15.8 N.M.
(1.1) 4.7 (7.2) 118.7 (0.0) N.M.
1.7 6.8 (4.2) 11.8 1.9 N.M.
37.7 0.0 38.2 11.4
34.4 0.0 34.9
33.3 76.3 33.6
33.5 74.4 33.9
33.0 75.0 34.1
33.0 75.0 34.2
12.6
10.1
11.3
11.7
12.9
Source: AP, KT ZMICO Research
Figure 3: Presales
Figure 4: Backlog at end 2Q15
Btmn 25,000
2017 2,237
20,000 15,000 10,000
2016 3,449
5,000
Total Backlog Bt15,434mn 2015 9,784
-
Low rise
High rise
Source: AP, KT ZMICO Research
Source: AP, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
FINANCIAL TABLE PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Forex gain (loss) Extra Items Gain (loss) from affiliates Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btmn) Net income Forex and other extraordinary adjustments Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin ‐ residential (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2012 17,310 (11,273) 6,036 (3,128) 3,104 152 2,952 (213) 67 2,877 (691) 0 121 0 2,186 0.77 0.77 2,064 0.72 0.25
2013 19,989 (13,270) 6,718 (3,944) 2,991 159 2,832 (293) 58 2,552 (539) 0 5 (1) 2,013 0.70 0.70 2,009 0.70 0.25
2014 23,149 (15,304) 7,845 (4,140) 3,725 84 3,641 (344) 159 3,242 (627) 0 2 (66) 2,615 0.83 0.83 2,613 0.83 0.38
2015E 23,140 (15,251) 7,890 (4,168) 3,865 79 3,786 (355) 145 3,382 (676) 0 170 (250) 2,705 0.86 0.86 2,569 0.82 0.34
2016E 23,591 (15,517) 8,073 (4,259) 3,927 62 3,865 (351) 51 3,802 (760) 0 0 269 3,041 0.97 0.97 3,041 0.97 0.39
2012 744 108 26,490 262 1,411 29,472 4,209 8,073 16,792 2,848 12,680 29,472
2013 889 110 30,784 550 1,375 34,410 5,059 10,371 20,402 2,860 14,007 34,410
2014 463 96 31,673 770 1,503 35,564 4,431 10,274 19,715 3,146 15,848 35,564
2015E 100 124 33,902 764 1,475 37,759 4,130 10,724 20,052 3,146 17,707 37,759
2016E 752 126 35,915 750 1,154 40,345 3,150 12,224 20,678 3,146 19,667 40,345
2012 2,186 (571) 152 724 2,492 173 42 216 (1,959) 66 (509) 0 (2,401) 306 2,914 1.02
2013 2,013 (422) 159 (4,419) (2,669) (95) 6 (89) 3,589 29 (715) 0 2,903 145 (2,331) (0.82)
2014 2,615 (181) 84 (1,563) 956 (433) 552 119 (729) 0 (772) 0 (1,501) (426) 1,280 0.41
2015E 2,705 263 79 (1,639) 1,408 (550) (4) (554) 149 0 (818) (548) (1,217) (363) 1,359 0.43
2016E 3,041 (252) 62 (1,757) 1,095 (300) 0 (300) 520 0 (1,082) 420 (143) 652 1,045 0.33
2012 26.9 12.6 39.6 34.9 17.9 17.1 12.6 11.9 24.0
2013 15.5 (3.6) (8.3) 33.6 15.0 14.2 10.1 10.0 21.1
2014 15.8 24.5 18.1 33.9 16.1 15.7 11.3 11.3 19.3
2015E (0.0) 3.8 3.4 34.1 16.7 16.4 11.7 11.1 20.0
2016E 1.9 1.6 12.4 34.2 16.6 16.4 12.9 12.9 20.0
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO is a partnership between KTB and ZMICO. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, KBS, PSL, SVH, VNG, ZMICO, CPI . KT ZMICO is a financial advisor for U, LOXLEY, SUTHA, ZMICO, MAKRO, CPALL, PLE, SAFARI, PACE, TPOLY, TFG. KT ZMICO is a co‐underwriter of KOOL, ORI, SCI, SR.
Anti‐corruption Progress Indicator
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
