Industry Update - Global Alliance Partners
Industry Update August 27, 2014
Property Development (Real Estate)
Neutral
Better prospects from 2H14 onward New launches of residential units and their take-up rates bottomed out in Feb 14 and have since recovered along with the rising consumer confidence. Presales for developers under our coverage have also risen since 2Q14 and we expect even further improvement in 2H14. After reviewing the fundamentals of each company, we believe SPALI remains one of the strongest developers in the industry, so we raise its TP and upgrade its rating to Buy from Trading Buy. We maintain a Neutral weight on the sector, and AP and QH are our top picks mainly for their expected total returns (price upside + dividend). Worst is behind us Based on the monthly take-up rate of new launches (rolling 3-month average), the industry has already bottomed out; average monthly launches rose from the year’s trough of 5,644 residential units (with a 15.4% take-up rate) in Feb 14 to 6,425 units (with a 20.4% takeup rate) in Jul-14. This recovery is in line with the rising consumer confidence index, which is now at an 11-month high of 78.2.
Share data SET index
1,560.17
Sector index
315.21
52-week high
317.57
52-week low
215.79
Market capitalization (Bt m)
967,077.55
% of market cap
6.89
Avg daily turnover (m shares)
1,834.37
Beta
1.59
Sector Performance (%) 1M
3M
12M
Absolute
0.92
19.39
28.19
Relative
-0.50
7.35
8.76
Sharp recovery expected in 2H14 With the improving economy and rising consumer confidence, we expect new launches and take-up rates to rise sharply HoH in 2H14. For the nine developers under our coverage, we expect cumulative presales to rise 55.9% HoH in 2H14. Note that the big spike is partly due to high cancellations/rejections (normally shown as negative presales) in 1H14 on the back of EIA-related delays and speculative provincial CD markets. Upgrade TP of SPALI as fundamentals remain strong Originally, we applied 2015E PER of 8.0x (+0.25SD) to arrive at SPALI’s TP of Bt25.0; the low PER was given because of the minimal earnings growth of 2.9% in 16E. However, after considering other fundamental factors (e.g., revenue visibility, presales growth and EPS growth) that might influence trading PER, SPALI remains one of the strongest developers in the sector. Thus, we upgrade its TP from Bt25.0 to Bt28.25, based on 9.0x PER (+0.5SD). The rating for SPALI is now Buy, up from Trading Buy. Maintain Neutral for the sector, AP and QH still top picks QH (Buy, Bt5.24 TP) is one of the top picks thanks to expected rising quarterly transfers in 14E and healthy earnings growth of 14.6%17.8% in 15E-16E; QH’s residential 15E PER is still the cheapest in the industry at 3.5x. AP (Buy, Bt8.75 TP) is the other top pick thanks to its expected turnaround of presales going forward and its 16.7% upside to our TP. Besides the two top picks, SIRI (Buy, post-XR TP of Bt2.22) is also an interesting turnaround play that offers high price upside of 17.8% if investors plan to exercise their right to buy new shares at Bt1.30 per share at the ratio of 3:1 (existing shares: new shares). For SIRI, we believe the market has overreacted to the news of capital rising.
Wasu Mattanapotchanart Analyst, no. 44357 [email protected] 66 (0) 2624-6268
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
page 1 of 6
Worst is behind us New launches and take-up rates have bottomed out New launches and take-up rates can swing wildly from month to month due to seasonality and other external factors, so we use rolling 3-month average numbers to observe the industry’s trend (Figure 1). It turns out that average monthly launches bottomed out in Feb 14 at 5,644 units with a 15.4% take-up rate before rising to 8,054 units in July with a 20.4% take-up rate. The first seven months of 2014 saw 56,281 actual units being launched (-22.0% YoY), 52% of which were CD units. 2Q14 presales came back strongly Presales of the nine developers under our coverage (see Figure 3) rose by 59.8% QoQ in 2Q14 on the back of political stability and increased project launches. SIRI’s 2Q14 presales rose at the fastest clip in the industry (+895.9% QoQ) thanks to its low base in 1Q14 due to cancellations of CD bookings; there were project delays caused by EIA and booking cancellations of holiday homes in Phuket, Hua Hin and Pattaya. Figure 1: Monthly take-up rate of new launches (3-
Figure 2: Monthly take-up rate of new launches (actual)
month rolling avg)
Source: AREA, KT ZMICO Research
Source: AREA, KT ZMICO Research
Figure 3: 1Q-2Q14 presales by company
Source: Company Data, KT ZMICO Research
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page 2 of 6
Sharp recovery expected in 2H14 Presales expected to skyrocket in 2H14 We believe that the cumulative presales of companies under our coverage will rise sharply in 2H14 to Bt130.1bn (+38.9% YoY, +55.9% HoH) as these companies are prepared to launch more projects to accommodate improving demand. We expect the value of project launches at Bt158.3bn in 2H14 (+39.2% HoH) from companies under our coverage. Waves of CD completions to boost 2H14E earnings We have 2H14E transfers of Bt193.9bn (+15.3% YoY, +44.3% HoH). High expected growth during 2H14 is due to concentrated completions of CD. SPALI is expected to have the highest HoH growth of revenue from project sales in 2H14. After only one CD (Bt3.9bn) was finished in 1H14, SPALI will have four more CD completions worth a combined Bt10.1bn in 2H14, boosting 2H14E transfers to Bt19.3bn (+60.5% YoY, +140.0% HoH). Hence, we expect SPALI to have 2H14E earnings of Bt3.3bn (+57.0% YoY, +160.4% HoH). Figure 4: Annual presales
Source: Company data, KT ZMICO Research
Figure 5: Semi-annual presales
Source: Company data, KT ZMICO Research
Figure 6: HoH growth rate of 2H14E transfers by company
Source: Company Data, KT ZMICO Research
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page 3 of 6
Still offering some price upside to 15E TPs SPALI upgraded to Buy, LH reduced to Trading Buy Originally, we applied 2015E PER of 8.0x (+0.25SD) to arrive at SPALI’s TP of Bt25.0; the low PER was given because of the minimal earnings growth of 2.9% in 16E. However, after considering revenue visibility, presales growth and EPS growth in 14E15E (Figure 7), SPALI remains one of the strongest developers in the sector. Thus, we upgrade its TP from Bt25.0 to Bt28.25, based on 9.0x PER (+0.5SD). The rating for SPALI is now Buy, up from Trading Buy. On the other hand, we reduce the rating for LH (Trading Buy, Bt11.30 TP) from Buy to Trading Buy as the share price has almost reached our TP; the short- to medium-term positive catalyst could be the sale of Terminal 21. Potential upsides to our forecasts lie in asset sales LH (Trading Buy, Bt11.30 TP) and QH are planning to sell LHBANK to a potential buyer with banking expertise. Also, LH will most likely sell the shopping mall part of Terminal 21 in late 14E or early 15E, which could result in after-tax gain on sale of around Bt1.1bn (Figure 8). Finally, PF plans to sell three plots of land in 2H14 cumulatively priced at Bt3.1bn; the company has stated that the GPM of these sales should be close to 40.0% while we are forecasting only 35.0%, representing 12.4% upside to our 2014E earnings of Bt980.5m, up from 2013 earnings of Bt27.3m. QH, TP remain top picks QH (Buy, Bt5.24 TP) is one of the top picks thanks to expected rising quarterly transfers in 14E and healthy earnings growth of 14.6%-17.8% in 15E-16E; QH’s residential 15E PER is still the cheapest in the industry at 3.5x (vs. peers’ range of 7.5x – 12.6x). AP (Buy, Bt8.75 TP) is the other top pick on the back of the expected turnaround of presales going forward and its 16.7% upside to our TP. Besides the two top picks, SIRI (Buy, post-XR TP of Bt2.22) is an interesting turnaround play that offers high price upside of 17.8% if investors plan to exercise their right to buy new shares at Bt1.30 per share at the ratio of 3:1 (existing shares: new shares). Figure 7: Scoring (higher numbers receive higher score) as of 30 Jun 14
SPALI LPN PS AP* LH SIRI QH SC PF
Secured Revenue 9 8 6 7 4 5 2 3 1
2014E Presales EPS Growth Growth 6 7 3 1 5 5 8 4 7 3 1 8 4 2 2 6 9 9
ROE 9 7 8 3 6 4 5 2 1
Secured Revenue 8 9 5 6 2 7 3 4 1
2015E EPS Growth ROE 8 9 9 8 7 7 4 3 3 5 1 4 6 6 5 2 2 1
Total score 56 45 43 35 30 30 28 24 24
*based on data on 3 Aug 14 Source: Company Data, KT ZMICO Research Figure 8: Potential gain on sale of Terminal 21 (shopping mall)
Cost of shopping mall Expected selling price of shopping mall Gain on sale LH's gain on sale LH's gain on sale if LH buys back 15% of the shopping mall LH's after‐tax gain on sale if LH buys back 15%
Remarks 60% of Bt5.0bn cost of T21 60% of Bt3.0bn gain 45% of Bt3.0bn gain
Btm ‐3,000 6,000 3,000 1,800 1,350 1,080
Source: Company Data, KT ZMICO Research
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page 4 of 6
Figure 9: Trading PER of QH
2015E PER 3.5 26.6 10.8
Shared 2014E Earnings 2,204 1,028 3,232
Shared 2015E Earnings 2,534 1,171 3,705
2014E PER
2015E PER
Shared 2014E Earnings
Shared 2015E Earnings
13.3 25.0 17.0
12.6 21.7 15.7
4,741 2,225 6,967
5,006 2,563 7,569
2014E PER 4.0 30.3 12.4
Residential + Rental Investment in associates Total
Source: QH, KT ZMICO Research Figure 10: Trading PER of LH
Residential + Rental + Other long‐term investments Investments in associates Total
Source: LH, KT ZMICO Research Figure 11: Peer comparison
Ticker
Price (Local)
TP
LH TB Equity
11.00
11.30
PS TB Equity SPALI TB Equity QH TB Equity
34.75 25.25 4.36
37.75 28.25 5.24
LPN TB Equity
22.10
22.90
SIRI TB Equity AP TB Equity SC TB Equity PF TB Equity NOBLE TB Equity AVERAGE
2.08 7.50 3.92 1.31 10.4
2.22 8.75 4.12 1.21
Rating Trading Buy Buy Buy Buy Trading Buy Buy Buy Buy Sell ‐
Mkt Cap (US$m)
Norm. EPS growth (%) 13A 14E 15E
Norm. PER (x) 13A 14E 15E
Yield (%) 14E
ROE (%) 14E
3721
14.02
1.2
‐0.4
17.0
16.8
16.9
3.7
17.3
2421 1358 1254
48.62 5.055 96.45
13.6 58.9 1.1
15.6 17.2 14.6
11.7 15.0 12.5
10.1 9.5 12.4
9.6 8.1 10.8
4.4 5.0 4.2
23.6 30.8 18.4
1022
8.189
‐7.4
56.5
14.0
15.1
9.7
5.2
29.7
629 672 456 237 149
‐46.5 ‐4.93 ‐11.4 ‐92.2 8.742
31.4 7.6 39.9 3020.9 ‐17.8
1.2 10.3 12.0 ‐7.0 ‐48.1
9.9 10.7 13.9 274.4 14.8 39.4
7.6 9.9 9.6 8.8 15.4 11.5
7.5 9.0 8.6 9.5 29.7 11.9
6.0 3.6 4.7 3.6 3.5 4.4
14.9 14.7 14.0 0.0 7.1 17.0
Source: Company Data, Bloomberg, KT ZMICO Research
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page 5 of 6
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 TRADING BUY: Expecting positive total returns of 10% or more over the next 3 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.
SELL INTO STRENGTH: Expecting total returns between -10% to +10% over the next 12 month; share price has largely priced in fundamentals
The industry, as defined by the NEUTRAL: analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months.
SELL: Expecting negative total returns of 10% or more 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.
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page 6 of 6
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th
th
th
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.
Property Development (Real Estate)
Neutral
Better prospects from 2H14 onward New launches of residential units and their take-up rates bottomed out in Feb 14 and have since recovered along with the rising consumer confidence. Presales for developers under our coverage have also risen since 2Q14 and we expect even further improvement in 2H14. After reviewing the fundamentals of each company, we believe SPALI remains one of the strongest developers in the industry, so we raise its TP and upgrade its rating to Buy from Trading Buy. We maintain a Neutral weight on the sector, and AP and QH are our top picks mainly for their expected total returns (price upside + dividend). Worst is behind us Based on the monthly take-up rate of new launches (rolling 3-month average), the industry has already bottomed out; average monthly launches rose from the year’s trough of 5,644 residential units (with a 15.4% take-up rate) in Feb 14 to 6,425 units (with a 20.4% takeup rate) in Jul-14. This recovery is in line with the rising consumer confidence index, which is now at an 11-month high of 78.2.
Share data SET index
1,560.17
Sector index
315.21
52-week high
317.57
52-week low
215.79
Market capitalization (Bt m)
967,077.55
% of market cap
6.89
Avg daily turnover (m shares)
1,834.37
Beta
1.59
Sector Performance (%) 1M
3M
12M
Absolute
0.92
19.39
28.19
Relative
-0.50
7.35
8.76
Sharp recovery expected in 2H14 With the improving economy and rising consumer confidence, we expect new launches and take-up rates to rise sharply HoH in 2H14. For the nine developers under our coverage, we expect cumulative presales to rise 55.9% HoH in 2H14. Note that the big spike is partly due to high cancellations/rejections (normally shown as negative presales) in 1H14 on the back of EIA-related delays and speculative provincial CD markets. Upgrade TP of SPALI as fundamentals remain strong Originally, we applied 2015E PER of 8.0x (+0.25SD) to arrive at SPALI’s TP of Bt25.0; the low PER was given because of the minimal earnings growth of 2.9% in 16E. However, after considering other fundamental factors (e.g., revenue visibility, presales growth and EPS growth) that might influence trading PER, SPALI remains one of the strongest developers in the sector. Thus, we upgrade its TP from Bt25.0 to Bt28.25, based on 9.0x PER (+0.5SD). The rating for SPALI is now Buy, up from Trading Buy. Maintain Neutral for the sector, AP and QH still top picks QH (Buy, Bt5.24 TP) is one of the top picks thanks to expected rising quarterly transfers in 14E and healthy earnings growth of 14.6%17.8% in 15E-16E; QH’s residential 15E PER is still the cheapest in the industry at 3.5x. AP (Buy, Bt8.75 TP) is the other top pick thanks to its expected turnaround of presales going forward and its 16.7% upside to our TP. Besides the two top picks, SIRI (Buy, post-XR TP of Bt2.22) is also an interesting turnaround play that offers high price upside of 17.8% if investors plan to exercise their right to buy new shares at Bt1.30 per share at the ratio of 3:1 (existing shares: new shares). For SIRI, we believe the market has overreacted to the news of capital rising.
Wasu Mattanapotchanart Analyst, no. 44357 [email protected] 66 (0) 2624-6268
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
page 1 of 6
Worst is behind us New launches and take-up rates have bottomed out New launches and take-up rates can swing wildly from month to month due to seasonality and other external factors, so we use rolling 3-month average numbers to observe the industry’s trend (Figure 1). It turns out that average monthly launches bottomed out in Feb 14 at 5,644 units with a 15.4% take-up rate before rising to 8,054 units in July with a 20.4% take-up rate. The first seven months of 2014 saw 56,281 actual units being launched (-22.0% YoY), 52% of which were CD units. 2Q14 presales came back strongly Presales of the nine developers under our coverage (see Figure 3) rose by 59.8% QoQ in 2Q14 on the back of political stability and increased project launches. SIRI’s 2Q14 presales rose at the fastest clip in the industry (+895.9% QoQ) thanks to its low base in 1Q14 due to cancellations of CD bookings; there were project delays caused by EIA and booking cancellations of holiday homes in Phuket, Hua Hin and Pattaya. Figure 1: Monthly take-up rate of new launches (3-
Figure 2: Monthly take-up rate of new launches (actual)
month rolling avg)
Source: AREA, KT ZMICO Research
Source: AREA, KT ZMICO Research
Figure 3: 1Q-2Q14 presales by company
Source: Company Data, KT ZMICO Research
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page 2 of 6
Sharp recovery expected in 2H14 Presales expected to skyrocket in 2H14 We believe that the cumulative presales of companies under our coverage will rise sharply in 2H14 to Bt130.1bn (+38.9% YoY, +55.9% HoH) as these companies are prepared to launch more projects to accommodate improving demand. We expect the value of project launches at Bt158.3bn in 2H14 (+39.2% HoH) from companies under our coverage. Waves of CD completions to boost 2H14E earnings We have 2H14E transfers of Bt193.9bn (+15.3% YoY, +44.3% HoH). High expected growth during 2H14 is due to concentrated completions of CD. SPALI is expected to have the highest HoH growth of revenue from project sales in 2H14. After only one CD (Bt3.9bn) was finished in 1H14, SPALI will have four more CD completions worth a combined Bt10.1bn in 2H14, boosting 2H14E transfers to Bt19.3bn (+60.5% YoY, +140.0% HoH). Hence, we expect SPALI to have 2H14E earnings of Bt3.3bn (+57.0% YoY, +160.4% HoH). Figure 4: Annual presales
Source: Company data, KT ZMICO Research
Figure 5: Semi-annual presales
Source: Company data, KT ZMICO Research
Figure 6: HoH growth rate of 2H14E transfers by company
Source: Company Data, KT ZMICO Research
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page 3 of 6
Still offering some price upside to 15E TPs SPALI upgraded to Buy, LH reduced to Trading Buy Originally, we applied 2015E PER of 8.0x (+0.25SD) to arrive at SPALI’s TP of Bt25.0; the low PER was given because of the minimal earnings growth of 2.9% in 16E. However, after considering revenue visibility, presales growth and EPS growth in 14E15E (Figure 7), SPALI remains one of the strongest developers in the sector. Thus, we upgrade its TP from Bt25.0 to Bt28.25, based on 9.0x PER (+0.5SD). The rating for SPALI is now Buy, up from Trading Buy. On the other hand, we reduce the rating for LH (Trading Buy, Bt11.30 TP) from Buy to Trading Buy as the share price has almost reached our TP; the short- to medium-term positive catalyst could be the sale of Terminal 21. Potential upsides to our forecasts lie in asset sales LH (Trading Buy, Bt11.30 TP) and QH are planning to sell LHBANK to a potential buyer with banking expertise. Also, LH will most likely sell the shopping mall part of Terminal 21 in late 14E or early 15E, which could result in after-tax gain on sale of around Bt1.1bn (Figure 8). Finally, PF plans to sell three plots of land in 2H14 cumulatively priced at Bt3.1bn; the company has stated that the GPM of these sales should be close to 40.0% while we are forecasting only 35.0%, representing 12.4% upside to our 2014E earnings of Bt980.5m, up from 2013 earnings of Bt27.3m. QH, TP remain top picks QH (Buy, Bt5.24 TP) is one of the top picks thanks to expected rising quarterly transfers in 14E and healthy earnings growth of 14.6%-17.8% in 15E-16E; QH’s residential 15E PER is still the cheapest in the industry at 3.5x (vs. peers’ range of 7.5x – 12.6x). AP (Buy, Bt8.75 TP) is the other top pick on the back of the expected turnaround of presales going forward and its 16.7% upside to our TP. Besides the two top picks, SIRI (Buy, post-XR TP of Bt2.22) is an interesting turnaround play that offers high price upside of 17.8% if investors plan to exercise their right to buy new shares at Bt1.30 per share at the ratio of 3:1 (existing shares: new shares). Figure 7: Scoring (higher numbers receive higher score) as of 30 Jun 14
SPALI LPN PS AP* LH SIRI QH SC PF
Secured Revenue 9 8 6 7 4 5 2 3 1
2014E Presales EPS Growth Growth 6 7 3 1 5 5 8 4 7 3 1 8 4 2 2 6 9 9
ROE 9 7 8 3 6 4 5 2 1
Secured Revenue 8 9 5 6 2 7 3 4 1
2015E EPS Growth ROE 8 9 9 8 7 7 4 3 3 5 1 4 6 6 5 2 2 1
Total score 56 45 43 35 30 30 28 24 24
*based on data on 3 Aug 14 Source: Company Data, KT ZMICO Research Figure 8: Potential gain on sale of Terminal 21 (shopping mall)
Cost of shopping mall Expected selling price of shopping mall Gain on sale LH's gain on sale LH's gain on sale if LH buys back 15% of the shopping mall LH's after‐tax gain on sale if LH buys back 15%
Remarks 60% of Bt5.0bn cost of T21 60% of Bt3.0bn gain 45% of Bt3.0bn gain
Btm ‐3,000 6,000 3,000 1,800 1,350 1,080
Source: Company Data, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
page 4 of 6
Figure 9: Trading PER of QH
2015E PER 3.5 26.6 10.8
Shared 2014E Earnings 2,204 1,028 3,232
Shared 2015E Earnings 2,534 1,171 3,705
2014E PER
2015E PER
Shared 2014E Earnings
Shared 2015E Earnings
13.3 25.0 17.0
12.6 21.7 15.7
4,741 2,225 6,967
5,006 2,563 7,569
2014E PER 4.0 30.3 12.4
Residential + Rental Investment in associates Total
Source: QH, KT ZMICO Research Figure 10: Trading PER of LH
Residential + Rental + Other long‐term investments Investments in associates Total
Source: LH, KT ZMICO Research Figure 11: Peer comparison
Ticker
Price (Local)
TP
LH TB Equity
11.00
11.30
PS TB Equity SPALI TB Equity QH TB Equity
34.75 25.25 4.36
37.75 28.25 5.24
LPN TB Equity
22.10
22.90
SIRI TB Equity AP TB Equity SC TB Equity PF TB Equity NOBLE TB Equity AVERAGE
2.08 7.50 3.92 1.31 10.4
2.22 8.75 4.12 1.21
Rating Trading Buy Buy Buy Buy Trading Buy Buy Buy Buy Sell ‐
Mkt Cap (US$m)
Norm. EPS growth (%) 13A 14E 15E
Norm. PER (x) 13A 14E 15E
Yield (%) 14E
ROE (%) 14E
3721
14.02
1.2
‐0.4
17.0
16.8
16.9
3.7
17.3
2421 1358 1254
48.62 5.055 96.45
13.6 58.9 1.1
15.6 17.2 14.6
11.7 15.0 12.5
10.1 9.5 12.4
9.6 8.1 10.8
4.4 5.0 4.2
23.6 30.8 18.4
1022
8.189
‐7.4
56.5
14.0
15.1
9.7
5.2
29.7
629 672 456 237 149
‐46.5 ‐4.93 ‐11.4 ‐92.2 8.742
31.4 7.6 39.9 3020.9 ‐17.8
1.2 10.3 12.0 ‐7.0 ‐48.1
9.9 10.7 13.9 274.4 14.8 39.4
7.6 9.9 9.6 8.8 15.4 11.5
7.5 9.0 8.6 9.5 29.7 11.9
6.0 3.6 4.7 3.6 3.5 4.4
14.9 14.7 14.0 0.0 7.1 17.0
Source: Company Data, Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
page 5 of 6
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 TRADING BUY: Expecting positive total returns of 10% or more over the next 3 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.
SELL INTO STRENGTH: Expecting total returns between -10% to +10% over the next 12 month; share price has largely priced in fundamentals
The industry, as defined by the NEUTRAL: analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months.
SELL: Expecting negative total returns of 10% or more 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 6 of 6
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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.
