STOCK FOCUS
Land and Houses
Tisco Securities has maintained its "hold" rating on Land and Houses shares, with a 12-month target price of Bt6.50 apiece.
Total sales revenues are forecast to decline 33.5 per cent quarter on quarter and 2.8 per cent year on year to Bt3.86 billion. Quarter-on-quarter sales momentum declined sharply despite a promotion campaign that started last October.Total sales revenues in the first quarter of 2006 was boosted by Bt90 million from the sale of land in Phuket. Excluding this item, total revenues for the first three months of this year should show a slight annualised gain. The first-quarter gross margin is likely to fall from 22 per cent in last year's fourth quarter to 16.9 per cent, owing to lower sales revenues and no gains on asset sales to QH Property Fund last year's fourth quarter. The likelihood of lower gross margins and a higher selling-and-administrative-expenses-to-sales ratio is behind the broker's forecast of a drop in net margin from 18 per cent in the same period last year. Tisco expects the property developer to post a net profit of Bt650 million for this year's first quarter. Land and Houses has the biggest market share in single-detached houses and the most projects in greater Bangkok. The company enjoys advantages over its competition in terms of economies of scale and construction times and can therefore capture market share in a variety of locations. Land and Houses will start nine projects nationwide this year, with 1,902 total units worth a total of Bt8.055 billion. The company will commence prebooking three The Room condominium projects and one The Bangkok condominium. Tisco maintains its net-profit estimates for Land and Houses at Bt3.82 billion and Bt4.38 billion for this year and next, respectively.
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