Pruksa Real Estate

Growth outlook good in 2013 BUY

Pruksa Real Estate Plc (PS)

2012 wrap-up. PS achieved presales of Bt29.4bn, +15% YoY, in line with market expectation, exceeding its Bt22.2bn in launches in the year, implying that stock on hand is good product. Most of the presales came from TH at 51%, with SDH taking 26% and condo just 23%. Our assessment places PS as #2 in the top seven, just behind SIRI. Revenue recognition was Bt27bn, slightly above its target but slightly below our forecast.

Ambitious targets for 2013. PS aims to grow presales by 21% YoY to Bt35.4bn, driven by strong condo growth of 40%, with SDH growth at 19% and TH at 10%. This comes in part from the low base for condo presales last year after it adopted a more conservative strategy, but part also from a greater number of projects in the provinces. There is upside risk if its condos meet better than expected response. It has a goal of revenue growth of 26-47% YoY to Bt34-39bn, propelled primarily by condos.

More new launches. PS will launch 78 projects worth Bt55bn, more than double last year's 30 projects worth Bt22bn. Of these, 47 are TH, 16 are SDH, 13 are condos and two will be overseas (India and Vietnam). This is large enough to support its presales target of Bt35.4bn.

Earnings upgrade. We fine-tune our 2012 forecast and raise our 2013 forecast by 12.4% to Bt5.6bn and 2014 by 22.3% to Bt6.3bn to incorporate higher condo revenue and better net margin. This implies solid growth of 40% in 2013 and 13% in 2014. PS has a large backlog of Bt35.4bn at end-2012, securing 69% of our revised 2013 forecast and 19% of 2014.

Reiterate BUY. Based on the earnings change plus solid growth outlook, we re-rate PS's valuation to 2.75X PBV from 2X. With 2013 EPS, this leads us to raise PT to Bt31/share, a moderate PER of 12.3x. We like PS's high visibility and its positive growth outlook and attractive TTR of 19%. Thus, we stand by our BUY.