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).