Housing Sector

Most share prices hit fair value. Downgrade to "Neutral"

Housing Sector



15 companies with 289 new projects worth of B333bn in 2013

In 2012, presales of 15 companies under our coverage are

projected to break through B200bn for the first time. In 9M12,

the total presales were worth of B158bn or 17.5% YoY increase,

while 4Q12 presales are likely to hit B50bn. In 2013, presales

are projected to increase continuously due to entrepreneurs'

aggressive plans of new project openings. These 15 companies

would introduce new 289 new projects worth of B333bnm

increasing from B248bn in 2013 with 230 projects. These

projects could be categorized into condominium and horizontal

projects worth of 50percent for each type, focusing more provincial

projects. Accordingly, the competition is projected to get to

another level; however, this wouldn't be so aggressive that the

price strategy is applied since the competition is mainly among

corporate entrepreneurs in Bangkok and surrounding provinces.

In terms of projects in other provinces, market sharing of local

entrepreneurs would be snatched.

2013 revenue recognition likely to get above B200bn, driving profit growth

For 2012 revenue and profit recognition, 15 companies under

our coverage are projected to recognize B173bn of revenue in

total, increasing by 23.7% YoY. In 4Q12, revenue recognition is

projected to stand at around B68.8bn which is the year's peak

due to lots of condominiums for transfer in this quarter. For

backlog at end-3Q12, it stood at B230bn which could be divided

into B191bn from condominiums and the rest from horizontal

projects. Accordingly, 2013 transfer is projected to rise to

B200bn. In terms of condominium projects, the backlog at end-

3Q12 exhibits 58 new projects that would be finished and

transferred in 2013 which are worth of B67.5bn. Combined with

continuous transfer of old projects from late-2012 and sales of

finished projects, condominium transfer is likely to stand at

B100bn; meanwhile, B100bn is also projected for horizontal

projects. Speaking of 2012 net profit, it is projected at B26bn or

24% increase. In 2013, the net profit is projected to rise to

B30.7bn, increasing by 18% YoY.

Most share prices increase close to fair value. Downgrade to "Neutral"

After recommending "Overweight" for the housing sector, share

prices have increased significantly, currently hitting 2013 fair

value. Accordingly, seeking investment with high return and low

risks are on rougher path. Moreover, risks for investment get

higher due to the fair value that is revised up along with

increased PER. Therefore, we downgrade our recommendation

from "Overweight" to "Neutral". Investors can take profit from

stocks that have already hit the fair value. For the time being,

stocks that have remained appealing are AP (FV@B10.81), MK

(FV@B5.05), MJD (FV@B3.65), and PF (B1.60).