We have revised up our FY21-23 earnings forecast 7-18% after SPALI announced its business plans, especially the launch of new projects that were much higher than we expected and the company is likely to report better-than-estimated 4Q21 earnings.
We have revised up our FY21-23 earnings forecast 7-18% after SPALI announced its business plans, especially the launch of new projects that were much higher than we expected and the company is likely to report better-than-estimated 4Q21 earnings.
We upgrade our SPALI recommendation from HOLD to BUY on a new target price of Bt25.6 (from Bt23.5), based on 8x long-term PE.
Proactively launching new projects in 2022
SPALI announced its business plan for FY22, aiming for a new project launch plan to create a new high level in terms of project number and project development value. BURN Aims to open 34 new projects with a value of 40 billion baht in 2022, a growth of 61% yoy, divided into 31 horizontal projects worth 35 billion baht (+53% yoy) and 3 new condominium projects worth 5 billion baht (+53% yoy). +163% yoy), while the company aims for FY22 bookings of 28 billion baht, an increase of 16%, but transfers remain stable at 29 billion baht.
marketcondominiummay not recover soon
SPALI also emphasizes its business plan on low-rise projects, which tend to stand out from condominiums. The management believes that it may take 4-5 years for the condo market to recover to its 2018 levels (pre-Covid-19 outbreak levels and the effect of LTV measures), even though Thailand has started to reopen the country. However, foreign demand is not likely to recover significantly. This is not only because the Chinese real estate market has slowed down. But there is still the issue of foreigners’ negative view of the Thai property market after a bad experience in the past as agents tend to sell at higher prices when the buyer is a foreigner.
Upgrade our recommendation to BUY, valuation upside and strong 4Q21 earnings forecast.
We have revised up our FY21-23 earnings forecast by 18%, 9% and 7%, respectively, given the company’s aggressive project launch plans and stronger-than-expected transfer income. We estimate earnings to be strong in 4Q21 at Bt2.6bn, up 51% qoq and 39% yoy. Transfer income is likely to recover strongly after the impact of the 3Q21 lockdown measures. Although the growth outlook is not high, it’s because Strong earnings base in 2021 and a greater product portfolio focused on low-rise factories However, the share price has an upside valuation and a good dividend yield of around 5% from a total upside basis above 15%. We therefore upgrade our SPALI recommendation from HOLD to BUY with a new TP of Bt25.6 based on a long-term PE of Bt25.6. 8x (from $23.4 previously)
