AP (Thailand) - Global Alliance Partners
AP (Thailand) Buy (17E TP Bt8.00)
Company Update
Close Bt6.70
Property Development November 21, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
4Q16E core profit to be peak YoY and QoQ Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.870
1.086
KT ZMICO vs. consensus Share data
4.6%
‐7.9%
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 (%)
21.00/593.00 30.00/26.64
52 week High / Low (Bt)
7.85/5.25
Avg. daily T/O (shares 000)
11,207.00
NVDR (%)
11.35
Estimated free float (%)
65.54
Beta
0.70
URL
www.apthai.com
CGR
Anti‐corruption
Level 2 (Declared)
Worarat Powpaka Analyst, no. 17992 [email protected] 66 (0) 2624‐6248
Maintain Buy with the new 2017E TP at Bt8 We maintain Buy for AP but the 2017E TP is lowered to Bt8 from Bt8.50 as we revised down AP’s 2017E earnings by 6.2%. Nevertheless, 4Q16E net profit will still be the best quarter of the year after four completed condos (Bt9.28bn, 61% sold) and four JV condos (Bt9.27bn, 86% sold) begin transferring in the period. The 2017E earnings are expected to grow by 9.2% YoY. AP revised down 2016E presales from delay of big condos’ launch plan Due to the current sentiment, AP has postponed the launch of JV condos, namely, Life One Wireless (Bt6.4bn), and another one worth Bt6bn, to 2017 from 4Q16. Hence, its presales target is revised down from Bt31bn to Bt26bn. Meanwhile, AP has reduced its 2016E revenue target to Bt21.2bn, decreasing from previously at Bt23.7bn, because the firm anticipates downside risk from realizing revenue of ready‐to‐move‐in condos. Revised up 2016E forecast slightly by 1.7% We revised up 2016E net profit slightly by 1.7%. Although we cut 2016E transfers by 11.7% in line with AP’s revenue outlook, we increased the shared gain from JVs by 45.3% for two reasons: 1) AP is delaying two JV condos worth Bt12bn to 2017E; hence, there will be no new launch expenses in 4Q16E as previously expected; 2) one more condo that was completed early will now be transferred in Dec‐16 from the original plan in 2017E. Consequently, share gained from JVs will be better than our previous forecast. Trimmed 2017E net forecast by 6.2% We trimmed the 2017E net earnings by 6.2%. This was mainly due to 1) our cut of 2017E transfers by 11.4% in line with the 2016E transfer trend and 2) a reduction of share gained from JVs by 35%, mainly on higher marketing and expenses from more JV condo launches in 2017E. JV projects to support AP’s performance in 2017‐19E AP is focusing on single detached houses and townhouses in the mid‐to‐ high segment located near BTS/MRT stations or expressways, which receive a good response from buyers. AP’s condo projects worth Bt25bn located in the CBD area next to current BTS and MRT stations have an average take‐up rate of 76% while JV condo projects worth Bt24bn also have a good take‐up rate of 87%. However, AP’s condo projects worth Bt11.6bn located on new lines, such as the Purple Line and the BTS Green Line extension (Bearing‐ Samutprakarn), as well as the provincial market have an average take‐up rate of only 38%. Nevertheless, the high demand for AP’s low‐rise projects and a high JV project backlog of Bt11bn will help support AP’s earnings in 2017‐19E. Moreover, this will also give more time for AP to sell condos that have low take‐up rates, with the expectation that the sales rate will improve after the Purple Line and Blue Line are completely connected along with the opening of the Green Line extension in 2H18E. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) 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 (%)
2013 19,989 2,013 0.70
2014 23,149 2,615 0.83
2015 22,079 2,623 0.83
(8.3)
18.1
0.3
9.5
9.2
0.70
0.83
0.79
0.88
1.00
(3.1)
18.3
(4.9)
11.7
13.0
0.25 4.90 2013 9.5 9.5 11.3 1.4 3.7 14.4 103.8
0.38 5.04 2014 8.1 8.1 9.5 1.3 5.7 16.5 89.9
0.30 5.61 2015 8.0 8.5 9.5 1.2 4.5 14.9 80.8
0.32 6.22 2016E 7.3 7.6 10.0 1.1 4.8 14.7 68.6
0.33 6.89 2017E 6.7 6.7 10.1 1.0 4.9 14.5 66.3
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2016E 20,678 2,873 0.91
2017E 21,237 3,137 1.00
Figure 1: Quarterly earnings review Profit and Loss (Btmn)
FY Ended 31 Dec
3Q15
2Q16
3Q16
% YoY
% QoQ
9M16
% YoY
2016E
% YoY
Revenue from project sales Total revenue Gross profit
5,371 5,499 1,876
4,320 4,430 1,516
4,215 4,448 1,564
(21.5) (19.1) (16.6)
(2.4) 0.4 3.1
12,575 13,050 4,503
(20.5) (19.1) (18.8)
20,047 20,678 7,101
(7.3) (6.3) (5.7)
YTD (% 2016E) 62.7 63.1 63.4
EBITDA
963
711
674
(30.1)
(5.2)
2,038
(25.1)
3,445
(7.3)
59.2
Interest expense
(71)
(45)
(25)
(64.6)
(44.1)
(128)
(44.2)
(183)
(34.7)
70.3
Other income
30
15
33
9.9
113.8
60
(43.6)
70
(43.7)
85.5
(213)
(166)
(127)
(40.5)
(23.9)
(418)
(23.0)
(719)
(1.9)
58.1
Other extraordinary Items
155
77
0
(100.0)
(100.0)
123
(28.2)
123
(28)
100.0
Gn (Ls) from affiliates
(72)
(38)
(53)
(27.1)
39.3
(139)
(2.1)
248
(219.7)
50.0
Net profit (loss)
745
526
457
(38.7)
(13.2)
1,437
(26.2)
2,873
9.5
50.0
Core net profit (loss)
621
464
457
(26.5)
(1.7)
1,314
(26.0)
2,777
11.7
47.3
Reported EPS (THB)
0.24
0.17
0.15
(38.7)
(13.2)
0.46
(26.2)
0.91
9.5
50.0
Core EPS (THB)
0.20
0.15
0.15
(26.5)
(1.7)
0.43
(26.0)
0.88
11.7
48.2
Gross margin‐ Project sales (%)
32.7
32.7
31.8
32.3
32.5
Gross margin ‐ overall (%)
34.1
34.2
35.2
34.1
34.3
Income tax
EBITDA margin (%)
17.5
16.0
15.1
15.7
16.7
Net margin (%)
13.5
11.9
10.3
10.9
13.9
Current ratio (x)
4.1
3.7
3.5
3.5
4.8
Interest coverage (x)
13.3
15.4
26.2
15.5
18.5
Debt / equity (x)
1.1
1.1
1.1
1.1
0.9
BVPS (Bt)
5.40
5.62
5.77
5.77
6.22
ROE (%)
15.4
13.4
11.8
11.8
14.7
Source: AP, KT ZMICO Research
Figure 2: Major forecast revisions Previous 2016E
New 2016E
% Change 2016E
Previous 2017E
New 2017E
% Change 2017E
Residential sales
22,698
20,047
(11.7)
23,211
20,503
(11.7)
Decreases along with lower high‐rise transfers
Low rise
13,260
13,247
(0.1)
13,976
14,427
3.2
Low‐rise transfers were better than previously forecast
High rise
9,438
6,801
(27.9)
9,235
6,076
(34.2)
Some high‐rise transfers were lower than previous estimates
SG&A
4,229
3,786
(10.5)
4,414
3,950
(10.5)
Decreases along with transfers cut
% SG&A to revenue
18.6
18.9
0.3
19.0
19.3
0.2
Percentage increase due to lower transfer base
Share gained (loss) from JVs
171
248
45.3
956
621
(35.0)
2016E share gain from JVs increased on lower expenses from delayed launches of two new condos; 2017E share gain from JVs increased on higher expenses from more launches of new condos
2,825
2,873
1.7
3,343
3,137
(6.2)
Btmn
Net profit
Source: AP, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: Presales
Figure 4: AP’s backlog at end 3Q16
Btmn 30,000 25,000
2018E 2,726
20,000 15,000
Total Backlog Bt13,111mn
10,000 5,000
2017E 2,635
2016E 7,750
Low rise
10M15 10M16
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
‐
High rise
Source: AP, KT ZMICO Research
Source: AP, KT ZMICO Research
Figure 5: JVs’ backlog (100%) at end 3Q16
2019E 3,751
2016E 3,865
JV Condo Backlog Bt23,394mn
2017E 5,843
2018E 9,935
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 (%)
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
2015 22,079 (14,545) 7,534 (3,969) 3,715 67 3,648 (280) 166 3,356 (733) 0 172 (207) 2,623 0.83 0.83 2,486 0.79 0.30
2016E 20,678 (13,577) 7,101 (3,786) 3,445 61 3,384 (183) 71 3,593 (719) 0 123 248 2,873 0.91 0.91 2,777 0.88 0.32
2017E 21,237 (13,886) 7,352 (3,950) 3,509 56 3,453 (268) 51 3,826 (689) 0 0 621 3,137 1.00 1.00 3,137 1.00 0.33
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
2015 421 72 31,938 748 850 36,147 3,980 10,699 18,493 3,146 17,654 36,147
2016E 955 82 31,264 744 862 37,591 3,600 10,774 18,035 3,146 19,555 37,591
2017E 100 84 34,189 735 882 39,929 4,204 10,274 18,242 3,146 21,687 39,929
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
2015 2,623 (252) 67 (2,907) (468) (1,051) 2,017 966 278 0 (818) 0 (540) (42) 650 0.21
2016E 2,873 (229) 61 740 3,446 (2,182) (4) (2,186) (305) 0 (944) 523 (726) 534 3,396 1.08
2017E 3,137 (599) 56 (3,113) (518) (300) 0 (300) 104 0 (1,006) 865 (37) (855) (568) (0.18)
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
2015 (4.6) (0.3) 0.3 34.1 16.8 16.5 11.9 11.3 21.8
2016E (6.3) (7.3) 9.5 34.3 16.7 16.4 13.9 13.4 21.5
2017E 2.7 1.9 9.2 34.6 16.5 16.3 14.8 14.8 21.5
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, TPOLY, M‐CHAI, TFD, CI, NUSA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
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
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Company Update
Close Bt6.70
Property Development November 21, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
4Q16E core profit to be peak YoY and QoQ Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.870
1.086
KT ZMICO vs. consensus Share data
4.6%
‐7.9%
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 (%)
21.00/593.00 30.00/26.64
52 week High / Low (Bt)
7.85/5.25
Avg. daily T/O (shares 000)
11,207.00
NVDR (%)
11.35
Estimated free float (%)
65.54
Beta
0.70
URL
www.apthai.com
CGR
Anti‐corruption
Level 2 (Declared)
Worarat Powpaka Analyst, no. 17992 [email protected] 66 (0) 2624‐6248
Maintain Buy with the new 2017E TP at Bt8 We maintain Buy for AP but the 2017E TP is lowered to Bt8 from Bt8.50 as we revised down AP’s 2017E earnings by 6.2%. Nevertheless, 4Q16E net profit will still be the best quarter of the year after four completed condos (Bt9.28bn, 61% sold) and four JV condos (Bt9.27bn, 86% sold) begin transferring in the period. The 2017E earnings are expected to grow by 9.2% YoY. AP revised down 2016E presales from delay of big condos’ launch plan Due to the current sentiment, AP has postponed the launch of JV condos, namely, Life One Wireless (Bt6.4bn), and another one worth Bt6bn, to 2017 from 4Q16. Hence, its presales target is revised down from Bt31bn to Bt26bn. Meanwhile, AP has reduced its 2016E revenue target to Bt21.2bn, decreasing from previously at Bt23.7bn, because the firm anticipates downside risk from realizing revenue of ready‐to‐move‐in condos. Revised up 2016E forecast slightly by 1.7% We revised up 2016E net profit slightly by 1.7%. Although we cut 2016E transfers by 11.7% in line with AP’s revenue outlook, we increased the shared gain from JVs by 45.3% for two reasons: 1) AP is delaying two JV condos worth Bt12bn to 2017E; hence, there will be no new launch expenses in 4Q16E as previously expected; 2) one more condo that was completed early will now be transferred in Dec‐16 from the original plan in 2017E. Consequently, share gained from JVs will be better than our previous forecast. Trimmed 2017E net forecast by 6.2% We trimmed the 2017E net earnings by 6.2%. This was mainly due to 1) our cut of 2017E transfers by 11.4% in line with the 2016E transfer trend and 2) a reduction of share gained from JVs by 35%, mainly on higher marketing and expenses from more JV condo launches in 2017E. JV projects to support AP’s performance in 2017‐19E AP is focusing on single detached houses and townhouses in the mid‐to‐ high segment located near BTS/MRT stations or expressways, which receive a good response from buyers. AP’s condo projects worth Bt25bn located in the CBD area next to current BTS and MRT stations have an average take‐up rate of 76% while JV condo projects worth Bt24bn also have a good take‐up rate of 87%. However, AP’s condo projects worth Bt11.6bn located on new lines, such as the Purple Line and the BTS Green Line extension (Bearing‐ Samutprakarn), as well as the provincial market have an average take‐up rate of only 38%. Nevertheless, the high demand for AP’s low‐rise projects and a high JV project backlog of Bt11bn will help support AP’s earnings in 2017‐19E. Moreover, this will also give more time for AP to sell condos that have low take‐up rates, with the expectation that the sales rate will improve after the Purple Line and Blue Line are completely connected along with the opening of the Green Line extension in 2H18E. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) 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 (%)
2013 19,989 2,013 0.70
2014 23,149 2,615 0.83
2015 22,079 2,623 0.83
(8.3)
18.1
0.3
9.5
9.2
0.70
0.83
0.79
0.88
1.00
(3.1)
18.3
(4.9)
11.7
13.0
0.25 4.90 2013 9.5 9.5 11.3 1.4 3.7 14.4 103.8
0.38 5.04 2014 8.1 8.1 9.5 1.3 5.7 16.5 89.9
0.30 5.61 2015 8.0 8.5 9.5 1.2 4.5 14.9 80.8
0.32 6.22 2016E 7.3 7.6 10.0 1.1 4.8 14.7 68.6
0.33 6.89 2017E 6.7 6.7 10.1 1.0 4.9 14.5 66.3
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2016E 20,678 2,873 0.91
2017E 21,237 3,137 1.00
Figure 1: Quarterly earnings review Profit and Loss (Btmn)
FY Ended 31 Dec
3Q15
2Q16
3Q16
% YoY
% QoQ
9M16
% YoY
2016E
% YoY
Revenue from project sales Total revenue Gross profit
5,371 5,499 1,876
4,320 4,430 1,516
4,215 4,448 1,564
(21.5) (19.1) (16.6)
(2.4) 0.4 3.1
12,575 13,050 4,503
(20.5) (19.1) (18.8)
20,047 20,678 7,101
(7.3) (6.3) (5.7)
YTD (% 2016E) 62.7 63.1 63.4
EBITDA
963
711
674
(30.1)
(5.2)
2,038
(25.1)
3,445
(7.3)
59.2
Interest expense
(71)
(45)
(25)
(64.6)
(44.1)
(128)
(44.2)
(183)
(34.7)
70.3
Other income
30
15
33
9.9
113.8
60
(43.6)
70
(43.7)
85.5
(213)
(166)
(127)
(40.5)
(23.9)
(418)
(23.0)
(719)
(1.9)
58.1
Other extraordinary Items
155
77
0
(100.0)
(100.0)
123
(28.2)
123
(28)
100.0
Gn (Ls) from affiliates
(72)
(38)
(53)
(27.1)
39.3
(139)
(2.1)
248
(219.7)
50.0
Net profit (loss)
745
526
457
(38.7)
(13.2)
1,437
(26.2)
2,873
9.5
50.0
Core net profit (loss)
621
464
457
(26.5)
(1.7)
1,314
(26.0)
2,777
11.7
47.3
Reported EPS (THB)
0.24
0.17
0.15
(38.7)
(13.2)
0.46
(26.2)
0.91
9.5
50.0
Core EPS (THB)
0.20
0.15
0.15
(26.5)
(1.7)
0.43
(26.0)
0.88
11.7
48.2
Gross margin‐ Project sales (%)
32.7
32.7
31.8
32.3
32.5
Gross margin ‐ overall (%)
34.1
34.2
35.2
34.1
34.3
Income tax
EBITDA margin (%)
17.5
16.0
15.1
15.7
16.7
Net margin (%)
13.5
11.9
10.3
10.9
13.9
Current ratio (x)
4.1
3.7
3.5
3.5
4.8
Interest coverage (x)
13.3
15.4
26.2
15.5
18.5
Debt / equity (x)
1.1
1.1
1.1
1.1
0.9
BVPS (Bt)
5.40
5.62
5.77
5.77
6.22
ROE (%)
15.4
13.4
11.8
11.8
14.7
Source: AP, KT ZMICO Research
Figure 2: Major forecast revisions Previous 2016E
New 2016E
% Change 2016E
Previous 2017E
New 2017E
% Change 2017E
Residential sales
22,698
20,047
(11.7)
23,211
20,503
(11.7)
Decreases along with lower high‐rise transfers
Low rise
13,260
13,247
(0.1)
13,976
14,427
3.2
Low‐rise transfers were better than previously forecast
High rise
9,438
6,801
(27.9)
9,235
6,076
(34.2)
Some high‐rise transfers were lower than previous estimates
SG&A
4,229
3,786
(10.5)
4,414
3,950
(10.5)
Decreases along with transfers cut
% SG&A to revenue
18.6
18.9
0.3
19.0
19.3
0.2
Percentage increase due to lower transfer base
Share gained (loss) from JVs
171
248
45.3
956
621
(35.0)
2016E share gain from JVs increased on lower expenses from delayed launches of two new condos; 2017E share gain from JVs increased on higher expenses from more launches of new condos
2,825
2,873
1.7
3,343
3,137
(6.2)
Btmn
Net profit
Source: AP, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: Presales
Figure 4: AP’s backlog at end 3Q16
Btmn 30,000 25,000
2018E 2,726
20,000 15,000
Total Backlog Bt13,111mn
10,000 5,000
2017E 2,635
2016E 7,750
Low rise
10M15 10M16
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
‐
High rise
Source: AP, KT ZMICO Research
Source: AP, KT ZMICO Research
Figure 5: JVs’ backlog (100%) at end 3Q16
2019E 3,751
2016E 3,865
JV Condo Backlog Bt23,394mn
2017E 5,843
2018E 9,935
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 (%)
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
2015 22,079 (14,545) 7,534 (3,969) 3,715 67 3,648 (280) 166 3,356 (733) 0 172 (207) 2,623 0.83 0.83 2,486 0.79 0.30
2016E 20,678 (13,577) 7,101 (3,786) 3,445 61 3,384 (183) 71 3,593 (719) 0 123 248 2,873 0.91 0.91 2,777 0.88 0.32
2017E 21,237 (13,886) 7,352 (3,950) 3,509 56 3,453 (268) 51 3,826 (689) 0 0 621 3,137 1.00 1.00 3,137 1.00 0.33
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
2015 421 72 31,938 748 850 36,147 3,980 10,699 18,493 3,146 17,654 36,147
2016E 955 82 31,264 744 862 37,591 3,600 10,774 18,035 3,146 19,555 37,591
2017E 100 84 34,189 735 882 39,929 4,204 10,274 18,242 3,146 21,687 39,929
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
2015 2,623 (252) 67 (2,907) (468) (1,051) 2,017 966 278 0 (818) 0 (540) (42) 650 0.21
2016E 2,873 (229) 61 740 3,446 (2,182) (4) (2,186) (305) 0 (944) 523 (726) 534 3,396 1.08
2017E 3,137 (599) 56 (3,113) (518) (300) 0 (300) 104 0 (1,006) 865 (37) (855) (568) (0.18)
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
2015 (4.6) (0.3) 0.3 34.1 16.8 16.5 11.9 11.3 21.8
2016E (6.3) (7.3) 9.5 34.3 16.7 16.4 13.9 13.4 21.5
2017E 2.7 1.9 9.2 34.6 16.5 16.3 14.8 14.8 21.5
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, TPOLY, M‐CHAI, TFD, CI, NUSA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
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
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
