Stock-market investors who are interested in property developers are being urged by securities firms to buy shares in four companies that have benefited most from the property-market recovery in the greater Bangkok area.
The companies are Pruksa Real Estate, Quality Houses, LPN Development and Supalai.
Commenting on the property market, DBS Vickers Securities (Thailand) said the number of new-housing units launched in the greater Bangkok area last year fell 15 per cent to 57,604 units. However, the average selling price of these units rose 17 per cent to Bt3.18 million a unit. As a result, the total value of newly launched units eased by only 1 per cent to Bt183 billion last year.
Total housing sales in 2009 - as opposed to total units launched - fell 10 per cent to 59.085 units.
The broker said demand for residences should improve this year and that supply should also rise.
"We see demand improving in 2010, supported by recovering consumer confidence and economy. But competition should also intensify as we expect more new supply to come into the market, especially housing targeted at low- to middle-income segments and Board of Investment-promoted projects, following the relaxation of BoI's housing criteria last year," the firm said.
Company earnings will continue to grow in 2010, but at slower rate of 8 per cent, against 27 per cent last year, due mainly to the end of the government's property tax-cut package in late March, the broker said. An extension of the package, if it happens, will lift the firm's 2010-profit forecast 10-12 per cent.
DBS Vickers Securities' preferred picks for investors are Pruksa Real Estate, Quality Houses, LPN Development and Supalai.
The firm said Pruksa and Quality Houses should record strong earnings growth of 19 per cent and 16 per cent, respectively, in 2010, against the sector's average of 8 per cent. LPN Development and Supalai are trading on very low price-to-earnings ratios of 6.8 and 4.8, respectively, while offering generous dividend yields in 2010 of 7.4 per cent and 9.4 per cent.
However, DBS Vickers Securities said it remained concerned about the risk of political problems, which it said could raise tensions and affect the market faster than expected hikes in interest rates. On the other hand, extension of the property tax-cut package would be a key catalyst for property-market growth.
Merchant Partner Securities has also recommended that investors buy Pruksa Real Estate and Supalai shares.
It said Pruksa had the potential to grow, according to its business plan to reach the top 10 in Asia by 2017, with annual revenue of Bt100 billion.
Supalai has significant potential for strong growth this year, thanks to its plan to launch 15 new projects and its estimate of 18-per-cent sales growth this year, the broker said.
Ayudhya Securities has recommend that investors buy shares in Pruksa Real Estate and Asian Property Development, because it says both have the potential to record high sales and net-profit growth this year.
The Trinity Securities Group has recommended LPN Development and Supalai to investors.
It said LPN has the potential to maintain growth of at least 20 per cent this year, and Supalai has a backlog worth Bt16.8 billion that will generate Bt7.5 billion in revenue in 2010. Supalai will also receive high income from new projects, the broker said.
