Bualuang SecuritiesAnanda Development Plc (ANAN)
In line with our estimate
ANAN reported a net profit of Bt27m for 4Q12, a turnaround from a net loss of Bt40m in 3Q12. The black ink on the bottom-line was in line with our estimate. Excluding a Bt108m non-cash Purchase Price Allocation (PPA) expense for the quarter, core profit would be Bt135m, up 45% QoQ. Note that a YoY comparison isn't possible, as the firm didn't report results on a quarterly basis till 1Q12.
ANAN announced no dividend payment for FY12 operations which was in line with expectations (management guidance ahead of the IPO in Nov 2012).
The QoQ bottom-line turnaround was led by a fatter condo GM and lower interest expenses. Condo GM was a hefty 39.6% in 4Q12 (the second-best in the sector) versus 36.6% in 3Q12. Interest expenses dived 42% QoQ to Bt38m following a post-IPO debt repayment. The SG&A/sales ratio was flat QoQ at 23%. A fatter core margin (from 6.0% in 3Q12 to 10.2% in 4Q12) was more than sufficient to offset the effect of a condo revenue contraction. Realized condo revenue dropped 15% QoQ to Bt1.3bn—Morph 38 was the key revenue contributor. PPA declined from Bt133m in 3Q12 to Bt108m in 4Q12, due to lower condo transference. The balance sheet strengthened to a net cash position at YE12 (positive equity of Bt4.9bn versus negative equity of Bt445m at end-Sept).
ANAN is expected to maintain a net profit for 1Q13. Condo revenue is should rise moderately QoQ. Morph 38 will remain the key contributor. SG&A expenses are manageable—only Elio condo is to launch (on March 9).
We maintain our projection unchanged—an FY13 net profit of Bt1.4bn, a turnaround from a turnaround from a net loss of Bt287m for FY12. Core earnings are expected to jump from Bt177m in FY12 to Bt1.5bn in FY13, driven by 90% YoY growth in condo sales to Bt9.4bn. Three Ideo Mobi condos (Phyathai, Sathorn, and Sukhumvit) will start transferring in late 3Q13 (securing 68% of our FY13 revenue forecast).
We reiterate our BUY rating on ANAN with an unchanged YE13 target price of Bt5, pegged to a target PER of 11x (a discount to the sector mean). ANAN trades at an FY13 core PER of 9.7x (a net PER of 10.5x), the lowest of the Residential Developer stocks we cover; the sector's simple mean is 13.4x. Good responses to the Elio launch in March and to new Ideo projects in 2Q13 would act as share price catalysts.