Download Ananda Development: 2Q earnings to be weak with stronger presales

Ananda Development:
2Q earnings to be weak with stronger presales
Jiraporn Linmaneechote
02 305 9197
[email protected]
Good presales with weak earnings expected in 2Q
ANAN moved up parts of its launch plans from 3Q to 2Q, which will result in ANAN
launching five condo projects to be developed under JV with combined value of
Bt21bn in 2Q. In sum, ANAN will launch 12 condo projects, of which nine condo
projects will be developed under JV, and five landed property projects with
combined value of Bt42.8bn. ANAN also plans to have a big marketing event at the
end of June. We expect to see good presales in 2Q but this would result in weak
earnings from higher marketing expenses in the quarter. Earnings should remain
weak until 4Q but we believe good presales can be a near-term catalyst. We
reiterate our Buy on ANAN on its two-year growth profile with good revenue
visibility, especially on JV projects.
Recommendation:
Buy
15 May 2017
Target Price: Bt6.10
Clarification on divestment gains
Price
Bt4.60
Market Value (Bt mn)
15,332
Date Established
Average Daily Value
(Bt mn)
Free Float (%)
23-Feb-17
33.42
34.1%
Price
ANAN realized divestment gains of Bt57mn (net of tax) from the restructuring of a
JV, Ananda MF Bangchak (AMB) for its Ideo Sukumvit 93, in which ANAN is setting
up another JV, Ananda Apac Bangchak as a subsidiary under AMB. In sum, ANAN
reduced its holding in the JV to 26% from 51%. This would lead to lower equity
income in 2018 when the project is scheduled for completion and transfer.
Operations update, 4Q to be the best quarter
ANAN achieved presales of Bt4.4bn (down 7% YoY and 56% QoQ) in 1Q17. This
represented 15% of its Bt30bn presales target. Note that ANAN launched two condo
projects with combined value of Bt1.9bn and one landed property project with value
of Bt1.6bn in 1Q. We expect to see improving presales momentum in 2Q from the
changes in its launch plan. We should see stronger earnings in 2H17 from the
schedule of condo transfer, mainly from JV projects. Note that ANAN will have 12
condo projects completed this year and five are projects under JV. ANAN has
secured 60% of our 2017 revenue target and nearly 100% on JV revenue target.
(Bt)
Net Income (Reported - mn)
EPS
EPS Change (YoY)
DPS
May-17
-150%
Nov-16
-
Jun-16
Estimates (Dec)
-100%
Jul-15
-50%
1.0
Dec-15
0%
2.0
Feb-15
50%
3.0
Aug-14
100%
4.0
Mar-14
150%
5.0
Sep-13
6.0
ANAN (LHS)
% Relative to SET Index (RHS)
Source: SET
Issued by Phatra Securities Public Company
Limited ("Phatra"). Phatra does and seeks to
do business with companies covered or
mentioned in its research reports. As a result,
investors should be aware that Phatra may
have a conflict of interest that could affect the
objectivity of this report. Investors should
consider this report as only a single factor in
making their investment decision. Refer to
important disclosures at the back of this
report.
2014A
1,207
0.36
-0.6%
0.10
2015A
1,501
0.45
24.4%
0.11
2016E
1,861
0.56
23.9%
0.13
2017E
2,322
0.70
24.8%
0.17
2018E
2,491
0.75
7.3%
0.20
2014A
12.71
2.2%
10.4
-12.0%
2015A
10.21
2.3%
14.6
-16.3%
2016E
8.24
2.9%
13.0
-0.2%
2017E
6.60
3.6%
14.5
3.7%
2018E
6.15
4.3%
16.6
1.0%
Valuation (Dec)
(Bt)
P/E
Dividend Yield
EV / EBITDA
Free Cash Flow Yield
15 May 2017| 1
Bus Performance
Return on Asset
Return on Equity
Operating Margin
Free Cash Flow
2015A
6.4%
15.4%
18.6%
(1,839)
2016A
6.6%
15.4%
13.0%
(2,500)
2017E
7.1%
15.7%
12.1%
(33)
2018E
8.3%
16.9%
12.2%
570
2019E
8.4%
16.2%
11.6%
148
Quality of Earnings
Cash Realization Ratio
Asset Replacement Ratio
Net Debt-to-Equity Ratio
Interest Cover
2015A
60.3%
170.0%
16.8%
0.7
2016A
127.5%
107.5%
18.1%
0.8
2017E
37.7%
262.1%
19.0%
0.6
2018E
30.4%
514.4%
19.0%
0.6
2019E
11.5%
109.2%
20.0%
0.6
Income Statement Data (Dec)
(Bt Millions)
Sales
% Change
EBIT
% Change
EBITDA
% Change
Net Interest & Other Income
Net Income (Adjusted)
% Change
2015A
2016A
2017E
2018E
2019E
10,740
4.0%
4,159
5.9%
2,062
6.9%
31
1,207
-0.6%
11,730
9.2%
4,043
-2.8%
1,622
-21.4%
165
1,501
24.4%
13,850
18.1%
4,672
15.6%
1,791
10.4%
122
1,861
23.9%
12,377
-10.6%
4,181
-10.5%
1,622
-9.4%
56
2,322
24.8%
11,690
-5.6%
3,878
-7.3%
1,469
-9.4%
10
2,491
7.3%
Cash Flow Data (Dec)
(Bt Millions)
2015A
2016A
2017E
2018E
2019E
Depreciation & Amortization
Change in Working Capital
Capital Expenditure
Free Cash Flow
1,207
70
(1,025)
(183)
(1,839)
1,501
95
433
(487)
(2,500)
1,861
113
(869)
(124)
(33)
2,322
115
(675)
(125)
570
2,491
117
(921)
(126)
148
Balance Sheet Data (Dec)
Cash & Equivalents
Trade Receivables
Other Current Assets
Property, Plant & Equipment
Other Non-Current Assets
Total Assets
2015A
2,573
122
13,447
517
(282)
20,471
2016A
2,683
369
15,694
903
(575)
25,366
2017E
2,000
290
17,184
906
(563)
27,131
2018E
2,000
259
17,510
910
(549)
28,517
2019E
2,000
245
18,322
913
(534)
30,751
Short-Term Debt
Other Current Liabilities
Long-Term Debt
Other Non-Current Liabilities
Total Liabilities
2,712
2,941
6,023
68
11,743
6,014
3,532
4,951
113
14,612
9,054
4,027
949
119
14,149
9,783
3,596
474
123
13,975
10,588
3,423
440
131
14,581
Total Equity
Total Equity & Liabilities
8,727
20,471
10,754
25,366
12,982
27,131
14,541
28,517
16,170
30,751
Net Income from Cont Operations (GAAP)
15 May 2017| 2
Figure 1: ANAN – 1Q earnings review
(Bt mn)
Sale of real estate
Total revenue
Cost of real estate sold
Total cost of sales
Gross profit - real estate
Total gross profit
Total SG&A expenses
EBIT
EBITDA
Other income/ expense
Interest expense
EBT
Taxes
EAT & before special items
Total share of profit from associates & JV
NI
EPS (Bt)
Pre-exceptional EPS (Bt)
Key ratios
Gross margin - real estate (%)
Gross margin (%)
OPEX as % of sales (%)
EBIT margin (%)
EBITDA margin (%)
Tax rate (%)
Net margin (%)
1Q17
1,577
2,183
(1,099)
(1,461)
478
722
(548)
174
145
60
(87)
147
(6)
141
(58)
140
0.04
0.03
1Q16
2,179
2,529
(1,381)
(1,597)
798
933
(626)
307
327
66
(69)
305
(48)
257
(108)
149
0.04
0.04
% YoY
30.3%
33.1%
25.1%
8.0%
6.6%
4.1%
6.4%
36.6%
36.9%
24.7%
12.1%
12.9%
15.6%
5.9%
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
-27.6%
-13.7%
-20.5%
-8.5%
-40.0%
-22.6%
-12.4%
-43.3%
-55.8%
-9.0%
27.0%
-51.7%
-87.2%
-45.2%
-46.9%
-5.6%
-5.6%
-43.9%
4Q16 % QoQ
2,716 -41.9%
3,531 -38.2%
(1,903) -42.3%
(2,396) -39.0%
813 -41.1%
1,135 -36.4%
(719) -23.8%
416 -58.2%
444 -67.5%
235 -74.5%
(93)
-6.7%
558 -73.7%
(84) -92.8%
474 -70.3%
420 -113.7%
893 -84.3%
0.27 -84.3%
0.27 -90.7%
29.9%
32.1%
20.4%
11.8%
12.6%
15.1%
25.3%
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Source: Company, Phatra Securities estimates
Figure 2: ANAN – Quarterly presales
(Bt mn)
12,000
10,000
8,000
6,000
4,000
2,000
Co ndo
1Q17E
3Q16
1Q16
3Q15
1Q15
3Q14
1Q14
3Q13
1Q13
3Q12
1Q12
0
Landed P ro perty
Source: Company, Phatra Securities estimates
15 May 2017| 3
Figure 3: ANAN - Revenue secured by backlog on hand (including JV projects)
(Bt mn)
30,000
24,000
18,000
12,000
6,000
2016E
2017E
Secured by backlog
2018E
Unsecured rev enue
Source: Company, Phatra Securities estimates
Figure 4: ANAN - Quarterly launches
(Bt mn)
20,000
15,000
10,000
5,000
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17E
3Q17E
4Q17E
-
Condo
Landed property
Source: Company, Phatra Securities estimates
15 May 2017| 4
Figure 5: ANAN – P/E band
Figure 6: ANAN – Trailing P/E
Source: SET, Phatra Securities estimates
Source: SET, Phatra Securities estimates
Figure 7: Property Comp
Price
SPALI
LH
AP
PSH
LPN
QH
SIRI
ANAN
SC
Average
(Bt)
24.50
10.00
7.65
22.10
10.80
2.50
2.02
4.60
3.30
Market
cap
(US$ mn)
1,211
3,395
693
1,391
459
771
831
442
397
Core EPS (Bt)
16A
2.85
0.67
0.83
2.72
1.47
0.29
0.23
0.45
0.46
17E
3.25
0.76
0.93
2.91
1.13
0.32
0.25
0.56
0.41
18E
3.60
0.81
1.06
3.15
1.47
0.35
0.26
0.70
0.51
Recurring EPS growth
16A
12.4%
17.8%
5.3%
-20.2%
-10.3%
-1.8%
14.7%
24.4%
7.0%
2.8%
17E
14.3%
12.6%
12.2%
6.8%
-22.9%
9.6%
7.8%
23.9%
-11.1%
7.9%
18E
10.8%
6.2%
13.1%
8.3%
29.7%
9.8%
5.7%
24.8%
23.4%
11.0%
Core PER (x)
16A
8.61
14.82
9.19
8.11
7.36
8.68
8.70
10.21
7.15
10.74
17E
7.53
13.16
8.19
7.60
9.55
7.92
8.07
8.24
8.04
9.81
18E
6.80
12.39
7.25
7.02
7.36
7.21
7.63
6.60
6.52
8.95
Yield
(%)
17E
4.91
7.24
4.39
6.68
6.39
6.31
6.20
2.91
5.22
6.17
PBV
(x)
17E
1.59
2.40
1.13
1.25
1.25
1.08
0.95
1.18
0.90
1.63
ROE
(%)
17E
22.6%
18.8%
14.4%
17.1%
13.3%
14.2%
11.7%
15.7%
11.5%
14.6%
Housing P/E
17E
7.53
8.75
8.19
7.60
9.55
(2.82)
8.07
8.24
8.04
7.38
Source: Companies, Phatra Securities estimates
15 May 2017| 5
18E
6.80
8.53
7.25
7.02
7.36
(2.29)
7.63
6.60
6.52
6.82
Price objective basis and risk
Our 12-month price objective (PO) of Bt6.10 is based on an average of (1) P/E of
8.60x, which would put it on par with mid-cap peers, which we think is conservative
given that ANAN has a solid growth profile; and (2) the combination of the DCF
valuation for ANAN and joint ventures to take into account the company's backlog
on hand, which has secured part of our revenue estimates for 2017-2019 period. Our
DCF valuation is based on a 2% terminal growth rate and a discount rate of 9.5%9.7%.
Risks to our PO are political headwinds, weaker-than-expected economic conditions,
slower-than-expected housing sales, higher-than-expected competition among
developers, tighter mortgage financing policy from commercial banks and a
stronger-than-expected increase in interest rates.
Special Disclosures
Phatra Securities does and seeks to do business with companies covered in its
research reports. As a result, investors should be aware that the firm may have a
conflict of interest that could affect the objectivity of this report.
Phatra Securities Public Company Limited ("Phatra") under its proprietary trading
desk, may, from time to time, issue derivative warrants that have underlying
securities contained or mentioned in this research report. Should Phatra be the
issuer of the derivative warrants, Phatra may act as the market maker for such
derivative warrants. As a result, investors should be aware that Phatra may have a
conflict of interest that could affect the objectivity of this research report.
15 May 2017| 6
Opinion Key: Investment ratings, indicators of expected total return (price appreciation plus dividend yield) within the six-month period from
the date of the initial rating or the last change in the rating, are: 1 Buy stocks which are expected to have a total return of at least 15%; 2Trading Buys which are expected to have a total return between 0-15%; ; 3 Neutral stocks which are expected to remain flat or move in a
range between +10 to minus 10%; 4- Take Profit stocks which are expected to have a total return of 0 to negative 15%; and 5 Underperform
stocks are the least attractive stocks in a coverage cluster (Thailand). Stocks not under coverage are designated Not Rated.
Copyright 2017 Phatra Securities Public Company Limited (“Phatra Securities”). All rights reserved. Any unauthorized use or disclosure is
prohibited. For distribution outside of Thailand, the distribution will be restricted to only “institutional investors” or other similar types of
investors as stipulated in each jurisdiction. In preparation of this research report, Phatra Securities has assumed and relied on the accuracy and
completeness of all information or data supplied or otherwise made available to us including public available information. Phatra Securities
assumes no responsibility for independent investigation or verification of such information and have relied on such information being
complete and accurate in all material respect.
Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any
options, futures or other derivatives related to such securities ("related investments"). Officers of Phatra Securities may have a financial interest
in securities of the issuer(s) or in related investments. Phatra Securities or its affiliates may from time to time perform investment banking or
other services for, or solicit investment banking or other business from, any entity mentioned in this research report.
This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific
investment objectives, financial situation and the particular needs of any specific person who may receive this research report. Phatra
Securities assumes no obligation to update or otherwise revise this research report. Investors should seek financial and investment advice
regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this research report and
should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if
any, may fluctuate and that each security's price or value may rise or fall. Accordingly, investors may receive back less than originally invested.
Past performance is not necessarily a guide to future performance.
Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this
research report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security,
effectively assume currency risk.
15 May 2017| 7
Corporate Governance Report of Thai Listed Companies 2015
Disclaimer
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is
made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the
information of a company listed on the Stock Exchange of Thailand and the Market of Alternative Investment disclosed to the public
and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an
evaluation of operation and is not based on inside information.
The survey result is as of the data appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the
survey result may be changed after that date. Phatra Securities Public Company Limited ("Phatra") does not confirm nor certify the
accuracy of such survey result. In addition, the list only includes companies under Phatra’s coverage except those specified.
Companies with Excellent CG Scoring by alphabetical order under Phatra’s Coverage
KTB
SCB
KBANK
TISCO
TMB
BIGC
HMPRO
ROBINS
SCC
IRPC
IVL
PTTGC
ADVANC
DTAC
INTUCH
THCOM
BCP
EGCO
RATCH
PTT
PTTEP
TOP
MINT
MCOT
VGI
CPN
LPN
PS
SPALI
CK
BTS
PSL
Companies with Very Good CG Scoring by alphabetical order under Phatra’s Coverage
CPF
GFPT
TU
TVO
BBL
TCAP
GLOBAL
TRUE
BANPU
BDMS
CENTEL
AMATA
HEMRAJ
TICON
STEC
TTCL
AAV
AOT
THAI
KTC
TWPC
MEGA
MAJOR
AP
ERW
LH
QH
SIRI
WHA
ITD
Companies with Good CG Scoring by alphabetical order under Phatra’s Coverage
M
CPALL
BJC
SCCC
STPI
NOK
CBG
BA
ESSO
GLOW
BH
CHG
BEC
N/A - Companies without survey result available by alphabetical order under Phatra’s Coverage
DIF
BCH
TLGF
UNIQ
BTSGIF
SPRC
BEM
JAS
SPF
DW Disclosure:
Phatra Securities Public Company Limited ("Phatra") under its proprietary trading desk, may, from time to time, issue derivative
warrants that have underlying securities contained in the table below. Should Phatra be the issuer of the derivative warrants, Phatra
may act as the market maker for such derivative warrants. As a result, investors should be aware that Phatra may have a conflict of
interest that could affect the objectivity of this research report.
AAV
ADVANC
AOT
BANPU
BBL
BCP
BDMS
BH
BLAND
BTS
CBG
CK
CPALL
CPF
CPN
DTAC
EARTH
GL
HANA
HMPRO
INTUCH
IRPC
ITD
IVL
JAS
KBANK
KTB
KTC
LH
LPN
MINT
PS
PTG
PTT
PTTEP
PTTGC
S50
SAMART
SAWAD
SCB
SCC
SIRI
SPALI
STEC
STPI
TCAP
THAI
THCOM
TMB
TOP
TPIPL
TRUE
TTA
TU
UNIQ
VGI
WHA
Anti-Corruption Progress Indicator of Thai Listed Companies 2015
Disclosure
The disclosure of evaluation of Thai Listed Companies with respect to anti-corruption, the Anti-Corruption Progress
Indicator (“Indicator”), is an initiative under the Securities and Exchange Commission (SEC)’s Sustainability Development Roadmap
for Listed Companies which emphasizing good corporate governance, corporate social responsibility and firm commitment to
fighting graft. The Indicator, comprising six level assessment of 0-5, is a result which demonstrate the commitment at management
and organizational levels that adopted the policy to refrain from corruption.
The survey result is as of the data appearing in the website of the SEC. As a result, the survey result may change
thereafter. Phatra Securities Public Company Limited (“Phatra”) does not confirm nor certify the accuracy of such survey result. In
addition, the list only includes companies under Phatra’s coverage except those specified.
Anti-Corruption Progress Indicator: List of Companies (under Phatra’s coverage)
Level 5 – Extended
BCP
CPN
PTT
PTTGC
SCC
Level 4 – Certified
BANPU
BBL
EGCO
ERW
INTUCH
IRPC
SCB
TCAP
THCOM
TISCO
TMB
TOP
IVL
KBANK
KTB
PSL
PTTEP
Level 3 – Established
AAV
ADVANC
AP
BDMS
BEC
BIGC
BTS
CENTEL
CHG
CK
CPALL
CPF
DTAC
GFPT
GLOW
HMPRO
LH
LPN
MCOT
MINT
NOK
PS
RATCH
ROBINS
SCCC
SPALI
STEC
STPI
THAI
TICON
TU
VGI
WHA
BH
GLOBAL
HEMRAJ
M
QH
TRUE
TVO
UNIQ
ITD
MAJOR
SIRI
Level 2 – Declared
AMATA
AOT
Level 1 – Committed
BJC
ESSO