Pruksa Real Estate

2013 profit to take big step

CGR


78 new project openings worth of B55bn, expecting B35.4bn

of presales

In 2013, PS has an aggressive plan to march toward new high for its

presales, revenue recognition, and operating profit. There would be

openings of 78 new projects worth of B55bn in total which can be divided

into 47 townhouse projects, 16 detached house projects, 13 condominium

projects and 2 international projects. At present, the company has bought

lands in order to prepare for 40 new projects. For projects during

development at end-2012, there are 141 projects worth of B49.3bn.

Accordingly, PS is projected to make presales worth of B35.4bn or 21% YoY

increase, which is considered a record high. In terms of revenue

recognition, the management has aimed at B34-36bn for the target in 2013

due to the transfer of 7 newly-finished condominium projects (backlog at

year's end is B9.1bn). For the horizontal projects after adoption of REM

system, the business cycle of condominiums has declined notably to 167

days (counting from trading day until the day of transfer). PS's profitability

is projected to rise due to revenue from condominiums that is projected to

be recognized by B10bn, which are of projects with the average gross

margin over 40% and the average net profit margin at 18.3%.


Maintain profit forecast, 32.75% YoY growth in 2013

In 2012, PS has recognized sales revenue by B26,994m which is close to

our projection at B26,997m, therefore we maintain our 2012 forecast. In

2013, the company's sales revenue is projected to be recognized by

B34,584m which is close to the management's assignment, so we

accordingly maintain our forecast. The mention revenue recognition is

supported by backlog at end-2012 of B35.4bn, divided into B20.5bn from

condominium projects while the rest is from horizontal and international

projects. The mentioned backlog is projected to bring not less than B24.8bn

of 2013 revenue recognition (72% of revenue forecast) while the rest would

be from selling condominium stock and horizontal projects which isn't

unlikely. Accordingly, our forecast could be categorized as conservative. In

terms of 2013 profitability, the norm profit margin is projected at 14.96%.

From the aforementioned factors, PS's 2013 profit is likely to stand at

B5.17bn or B2.34, increasing by 32.75% YoY.


Maintain 2013 fair value at 12x PER, implying B28.08 of fair

value in 2013

After recommending "BUY" for PS last April 2012 (around B14-15),

investors should have obtained a considerable amount of return. We

reiterate our recommendation of "BUY", assigning fair value at 12x PER or

B28.08.