Key takeaways from domestic NDRAnanda Development Plc (ANAN)
Last week, Mr Sermsak Khwanpuang, CIO, and Dr John Millar, IR, met retail and institutional investors. The FY13 business plan is clear—ANAN's turnaround is ongoing. The forthcoming announcement of a new business partner will be a short-term catalyst. Later, project launches and presales will trigger a valuation re-rating. The stock trades at an FY13 core PER of 10.1x, a 25% discount to our ResDev coverage. We have an upgraded YE13 target price of Bt5.50 (from Bt5.40), which factors in our profit forecast upgrade and an unchanged target PER of 12x. BUY!
Earnings projection upgrade with scope for upside
We have revised up our FY13 core profit forecast by 2% to factor in a more bullish revenue assumption (up 5%); note that 68% of our top-line expectation is secured by presales. However, our number is 17% below ANNA's target. The Atoll projects will determine the scope for upside—we assume Bt1.5bn in Atoll revenue in FY13; ANAN guides for Bt2.5bn. Launches in 2Q-3Q13 will add to secured FY14 income (the number is currently 26%). The expected forthcoming announcement of a new JV project would boost top-line visibility in FY15 onward.
New partner to release in 2Q13
ANAN will soon to announce a deal with a new business partner. The deal is for a project, so will not involve a shareholding change or the issuance of new shares (no dilution). We anticipate that the JV project will be big and will mean substantial upside to ANAN's business plan.
Aggressive business plan
Management unveiled the plan for use of IPO proceeds (Bt5.6bn). The firm will launch and re-launch 15 projects worth a total of Bt27bn—eight condos (Bt20bn; a new brand Elio and seven Ideo) and seven low-rise (purchased from its former business partner and re-branded as Atoll). The total FY13 launch value is Bt24bn. ANAN guides for record presales of Bt15bn, which we believe is achievable—it implies a 49% take-up rate for the condo launches. Its FY13 revenue target is Bt12bn (65percent secured by presales). The firm aims for a YE13 presales backlog of Bt10.7bn (Bt8.1bn to transfer in FY14 and Bt2.6bn in FY15).
Clear quarterly guidance
Last week, ANAN launched the first phase of Elio Sukhumvit 64 (53% take-up rate for Bt1.5bn launch value). In 2Q13, it will unveil Ideo (Bt2.1bn) near a BTS extension line, the second phase of Elio and the seven Atoll low-rise projects. In 3Q13, a new Ideo (Bt3.4bn) on a BTS extension line will launch. In 4Q13, ANAN will open bookings for three Ideo condos (Bt6.6bn) and the third phase of Elio. Its quarterly presales targets are Bt1.7bn for 1Q13, Bt3bn for 2Q13, Bt4.2bn for 3Q13 and Bt6bn for 4Q13. The quarterly revenue objectives are Bt1bn in 1Q13, Bt800m in 2Q13, Bt1.6bn in 3Q13 and a record of Bt8.6bn in 4Q13.