วันอังคารที่ 26 พฤษภาคม พ.ศ. 2552

Phillip Stock Investment Newsletter Recommends Buy AP

Asian Property Development – AP - BUY

Target price : Bt3.50
Recommendation : BUY
Closing Price (8 April 09) : Bt2.56

Low-rise housing presales momentum picks up
- First-quarter presales showed signs of a recovery from 4Q08.
- Low-rise housing sales backlog of Bt1.3b carried forward from last year and transfer of three condominium projects should be a revenue driver and help boost 1Q09 profit up 92% on the year. On a QoQ basis, first-

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quarter profit is expected to be down 45% due to a much higher revenue base from 4Q08.
- We retain our forecast that 2009 EPS will fall by 24% due to weak presales as a result of macroeconomic headwinds and a high revenue base from a year earlier.
- In our view, backlog is strong enough to reduce the risk of revenue and profit this year. Valuation looks compelling in P/E terms and dividend yield remains appealing. We reiterate a BUY opinion on AP with a price target of Bt3.50/share.

1Q09 presales show signs of recovery from 4Q08
Thai housing developer AP generated presales of Bt1,577m in 1Q09. The figures marked a recovery from the worst slump in 4Q08 when it posted presales of only Bt3b, but that was down from Bt2.3b in the same quarter in 2008. Overall, low-rise housing sales dropped on a YoY basis as deteriorating economic conditions sapped homebuyer confidence, but the figures signaled an improvement from 4Q08. Condo sales dropped both YoY and QoQ, as AP did not launch new condo projects in 1Q09. The pickup in sales momentum in 1Q09 reflected improved political situation, reviving confidence of homebuyers on the back of the new government's stimulus measures, and delay in home buying decision from 4Q08 when political tension escalated. In our view, the ongoing anti-government rally would however be a negative catalyst for the stock if the protest drags on. Our low-rise housing sales forecast of Bt1.2b for 1Q09 represents up to 36% of our full-year forecast for low-rise housing presales of Bt3.3b. For the time being, we however leave our estimates unchanged to provide cushion against potential market risks this year.

1Q09 profit expected to be much higher than in 1Q08 but lower than in 4Q08 due to high base effect
AP had a backlog of Bt12.7b at the start of 2009. Of the total, Bt1.6b came from low-rise housing sales and Bt11.04b from condo sales. Low-rise housing backlog would be fully realized as revenues in 1Q09-2Q09, while condo backlog of Bt4.5b would be realized as revenues this year. We expect AP to deliver 1Q09 revenue of Bt2.1b, down 32% QoQ but up 65% YoY. Margins should be flat. On this basis, we estimate AP's 1Q09 profit to be up 92% YoY but down 45% QoQ.

2009 EPS expected to fall 24% due to weak presales in the face of macroeconomic headwinds and high revenue base from a year earlier
Currently, AP has a backlog of Bt14.3b, comprising condo sales of Bt11.3b and low-rise housing sales of Bt2.9b. Out of the total, about Bt7.0b would be realized as revenues this year, accounting for 82% of our 2009 revenue forecast of Bt8.5b. To meet the target, the rest should come from revenue realization of Bt1.5b from low-rise housing sales, which are expected to come in at Bt3.3b this year. Under these assumptions, revenues are forecast to drop by 12% this year. Margins are anticipated to edge slightly lower from a year earlier due to the lack of cost adjustments this year. We estimate AP's 2009 EPS to fall by 24% to Bt0.54/share.

Valuation & Recommendation
In our view, backlog is strong enough to support revenue and profit this year. Sales momentum is picking up. At current levels, AP is trading at a mere 4x 2009 P/E, a big discount to its average historical trough valuations of 7.5x. The 2008 dividend of Bt0.25/share also reflects an attractive yield of roughly 10%. We reiterate a BUY opinion on AP with a price target of Bt3.50/share.

By Phillip Securities (Thailand) Plc. on Apr 9, 2009

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