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Preuksa Real Estate
Phatra Securities has a "neutral" recommendation on Preuksa Real Estate, having cut the company's estimated earnings by 10 per cent for 2007 and 8 per cent for 2008.
The revision is mainly to reflect higher operating costs and an increased income-tax burden. With Preuksa's 2007 earnings performance expected to be flat, the brokerage prefers other property developers with stronger growth potential. Preuksa is expected to show stronger pre-sales this year from its aggressive launches as well as the addition of two new segments: town houses and condominiums. However, with lower backlog on hand and more time required to translate pre-sales into revenue from the condominium segment, the brokerage expects revenue and earnings to be flat this year. The developer's strength is seen to be in the low-end town-house segment, in which there is less competition. The success of the company's efforts to grow by diversifying into other segments such as detached houses and condominiums remains to be seen. Preuksa's net earnings of Bt1.3 billion for 2006 came as no surprise to the market. A weaker margin was also seen, mainly as a result of competition in the detached-housing segment.
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