Supalai - the DBS Vickers Securities Equities Research

Thailand Company Focus
Supalai
Bloomberg: SPALI TB | Reuters: SPAL.BK
DBS Group Research . Equity 3 Nov 2009
Price: Bt5.45
SET
SET : 677.22
Fair Value : Bt 7.65
Reason for Report : Company Update
Potential Catalyst: Strong 2009 result, possible extension of property
tax-cut package
Analyst
Chanpen Sirithanarattanakul +66 0 2657 7824
chanpens@th.dbsvickers.com
Price Relative
6 . 30
5 . 30
4 . 30
3 . 30
2 . 30
1 . 30
Bt
Relative Index
2005 2006 2007 2008 2009
Supali ( LHS ) Relative SET INDEX ( RHS )
Forecasts and Valuation
FY Dec (Bt
m) 2008A 2009F 2010F 2011F
Turnover 5,998 8,939 9,768 10,689
EBITDA 1,955 3,515 3,217 3,430
Pre-tax Profit 1,778 3,328 3,031 3,223
Net Profit 1,069 2,300 2,116 2,292
Net Pft (Pre Ex.) 1,069 2,300 2,116 2,292
EPS (Bt) 0.7 1.3 1.2 1.3
EPS Pre Ex. (Bt) 0.7 1.3 1.2 1.3
EPS Gth Pre Ex (%) 30 102 (8) 8
Diluted EPS (Bt) 0.7 1.3 1.2 1.3
Net DPS (Bt) 0.3 0.6 0.6 0.6
BV Per Share (Bt) 2.9 4.2 4.9 5.7
PE (X) 8.2 4.1 4.4 4.1
PE Pre Ex. (X) 8.2 4.1 4.4 4.1
P/Cash Flow (X) 7.7 3.9 4.2 3.9
EV/EBITDA (X) 7.1 3.8 4.3 4.1
Net Div Yield (%) 5.5 10.1 10.2 11.0
P/Book Value (X) 1.9 1.3 1.1 1.0
Net Debt/Equity (X) 0.9 0.5 0.5 0.4
ROAE (%) 22.4 37.4 27.0 25.3
Earnings Rev (%): 1.2 2.6 1.0
Consensus EPS (Bt
Bt): 1.2 1.1 1.2
ICB Industry : Financials
ICB Sector: Real Estate
Principal Business: Property development, focusing on residential
property development
Corporate Governance
CG Report (2008)
Source of all data: Company, DBS Vickers, Bloomberg
290
240
190
140
90
All rounder
• Expect strong 102% earnings growth in 2009,
highest in the sector
• Large Bt13bn backlog at end-9M09 should ensure
revenue stream over the next two years
• Despite rally, SPALI is trading at only 4.4x 2010 PE
and offers 10.2% dividend yield for 2010. Our
estimated fair value of the stock is Bt7.65, based
on estimated RNAV, which suggests 41% upside
from current level
2009F earnings to jump 102% y-o-y to Bt2.3bn. This
would be led by (i) a surge in revenue from
condominiums and low-rise housing, (ii) wider gross
margin of 43.5% in 2009 vs 39.2% in 2008, and (iii) the
full-year tax-savings from the property tax-cut package.
Outlook remains positive. Total backlog amounted to
Bt13bn at end-Sep 2009, of which Bt2.5bn will be
realized in 4Q09, Bt5.6bn in 2010, and Bt4.9bn in 2011.
This means 4Q09 result should continue to be strong.
SPALI plans to launch three condominium projects worth
Bt4.7bn in 4Q09. These should boost presales for the
quarter.
Offering 41% upside to our fair value. Despite the
share price rally, SPALI is trading at only 4.4x 2010 PE,
still cheap compared to its peers. It also offers generous
2010 dividend yield of 10.2% (payable semi-annually).
SPALI is one of our favourites stocks in the residential
property sector for its diversified product mix, huge
backlog, strong management team, high ROE, attractive
valuation, and generous dividend yield. Our fair value
estimate at Bt7.65 based on RNAV should put the stock
at only 6.2x 2010 PE.
At A Glance
Issued Capital (m shrs) 1,717
Mkt. Cap (Btm/US$m) 9,355 / 280
Major Shareholders
Tangmatitham Family (%) 27.5
Thai NVDR (%) 10.8
Supalai (%) 7.0
Free Float (%) 54.7
Avg. Daily Vol.(‘000) 19,304
DBS VICKERS SECURITIES (THAILAND) COMPANY LIMITED IS ACTING AS OR MAY ACT AS THE FINANCIAL ADVISOR / THE
UNDERWRITER FOR THE OFFERING OF 120,000,000 TREASURY SHARES OF SUPALAI PUBLIC COMPANY LIMITED. INVESTORS SHOULD
READ THE PROSPECTUS IN DETAIL BEFORE MAKING A DECISION TO INVEST IN THE SHARES OF SUPALAI PUBLIC COMPANY LIMITED.
“In Singapore, this research report or research analyses may only be distributed
to Institutional Investors, Expert Investors or Accredited Investors as defined in the
Securities and Futures Act, Chapter 289 of Singapore.”
www.dbsvickers.com
Refer to important disclosures at the end of this report
ed: LM / sa: TW

Company Focus
Supalai
SWOT Analysis
Strengths
• Supalai (SPALI) is one of Thailand’s leading residential
property developers. With its 20-year track record, SPALI has
established its strong foothold in the Thai residential property
industry.
Weakness
• Residential property sales are relatively volatile, depending
on economic growth and consumer confidence.
• Covering a diversified product mix e.g. detached houses,
townhouses, condominium. These products are targeted
mainly at the mid-income earners where demand is still
strong.
• Huge backlog (cumulative presales that have yet to be
realized as revenue) of Bt13bn as of 30 Sep 2009 should
ensure revenue stream until 2011.
• Superior gross and net profit margins, compared to the
sector, thanks to the company’s effective cost and expenses
control and its efficient design.
• Strongest earnings growth in the sector in 2009F, while
offering very generous dividend yield, payable semi-annually.
Opportunities
• Thailand’s economic growth has bottomed out in 1H09 and
is expected to rebound strongly from a GDP contraction of
3.2% to a GDP growth of 4.0% next year. This should result
in increased housing demand next year.
Threats
• Potential increase in local interest rates next year
• Expiration of tax-cut package could hurt demand near
term
• The extension of the government’s tax-cut package (cut in
specific business tax, transfer fees and mortgage registration
fees) by another year to 29 Mar 2010 should mean a lot of tax
savings for both home buyers and developers.
• Introduction of the tax stimulus package that allows
personal income tax deductions for the first Bt300,000 in
payment for property purchase within 2009, should
encourage consumers to buy their houses within 2009. The
package is scheduled to expire on 31 Dec 2009. Any potential
extension of the package by another year, if any, should be
positive and further stimulate demand next year.
• Recent Board of Investment’s relaxed housing criteria should
present a good opportunity for SPALI to apply for BOI
promotional privileges for some of its projects, which fall into
BOI’s relaxed criteria.
Source: DBS Vickers
Page 2

Company Focus
Supalai
Company Background
20-year track record in the industry. SPALI was founded
in 1989 by Khun Prateep Tangmatitham and became
listed on the Stock Exchange of Thailand (SET) in 2003.
With its 20-year track record, SPALI has established its
strong foothold in the Thai residential property industry.
The company is now the only residential property
company in Thailand that is ISO 9001: 2000 certified in all
processes starting from planning, designing, construction,
sales, to after-sales service for both its low-rise and highrise
projects from The Engineering Institute of Thailand
under Royal Patronage and AFAQ-EAQA. The company
name Supalai means lucky and fortunate residence in
Thai.
Shareholding structure. SPALI’s major shareholder is the
Tangmatitham Family, which as of 26 Aug 2009, held a
combined 27.5% stakes in the company.
Shareholding Structure
Tangmatith
am Family
28%
Source: Company
Others
65%
SPALI
(Treasury
shares)
7%
Treasury stock program. In 2008-early 2009, given the
sharp fall in SPALI’s share price to significantly below its
book value, SPALI bought back 120m (6.99%) of its
shares via the treasury stock program at an average price
of Bt2.16 apiece. According to the SEC’s regulations,
SPALI has up to three years to sell these treasury shares,
or cancel them after three years. On 13 Oct 2009, SPALI’s
board of directors approved the company to sell the
120m repurchased shares via public offering. The price
will be determined by book-building method. Unsubscribed
shares, if any, following the general public
offer will be sold later on the main board of the SET.
Proceeds would be used for its working capital and for
land acquisition.
Group Structure. While SPALI currently focuses on
property development in Bangkok and the vicinities, the
company has four subsidiaries and affiliates, which
concentrate on property development in four other major
provinces in Thailand. These include:
(i) Supalai Property Management Co., Ltd. (69.45%)
which operates Supalai Pasak Resort Hotel in Saraburi
(ii
ii) Phuket Estate Co., Ltd. (99.89% owned)
which owns Supalai Resort & Spa in Phuket
(iii
iii) Supalai Northeast Co., Ltd. (98.77%)
which develops houses for sale in Khon Kaen
(iv
iv) Haadyai Nakarin Co., Ltd.
which operates commercial complex and houses for sale
in Haadyai, Southern part of Thailand
Dividend policy. SPALI has a policy to pay approximately
45% of net profit after tax as dividend. The company’s
board of directors may approve interim dividend payment
from time to time when deemed that the company has
enough profit to do so. The following chart shows the
company’s historical dividend payment. Note that in
1H09, SPALI has already paid Bt0.25 dividend per share
(DPS). Based on our conservative 41% payout ratio for
2009, we estimate total DPS for 2009 at Bt0.55,
suggesting another Bt0.30 DPS for 2H09. Nonetheless, if
we assume a 45% payout ratio in line with its policy, total
DPS for 2009 should be Bt0.60, suggesting another
Bt0.35 DPS for 2H09.
Dividend payment record
Btm
0.35
0.30
0.25
0.20
0.15
0.10
0.05
-
2004 2005 2006 2007 2008 1H09
1H 2H Payout (RHS)
Source: Company, DBS Vickers
60%
50%
40%
30%
20%
10%
0%
Page 3

Company Focus
Supalai
Businesses
Three main businesses. SPALI’s businesses can be classified
into three main categories including (i) residential property
development for sale, (ii) office for rent, and (iii) hotel and
resort business. Currently, residential property development
contributed 96% of total revenue, while rental and service
income makes up the remaining 4% of total revenue.
SPALI’s revenue breakdown (1H09)
Low-rise
housing
revenue
27%
Office rents
1%
Service
income
1%
Others
1%
Revenue recognition method. Sales of low-rise products are
mainly based on pre-built basis (completed units), while sales
of high-rise products are mostly based on off-plan basis.
SPALI realizes its revenue based on completion method (upon
title transfer).
SPALI’s project cycle
Low Rise - "Pre
"
Pre-built
built"
- Construction Commenced
- Construction
Commenced
- Purchase Made
Construction Preparation Period
Construction Period
Mortgage Approval/Cash Preparation
- Transfer of ownership
- 100% of Revenue Recognized
Source: Company, DBS Vickers
Condominium
revenue
High Rise
e - "Pre"
Pre-sale
sale"
- Construction Complete
- Purchase Made
Monthly Installments Preiod
(i) Property Development Business
All types of residential property development. SPALI focuses
on all types of residential property development including
both low-rise (detached houses, duplexes, and townhouses),
and high-rise (condominium). The company has now 31
projects on hand together with a number of land bank, which
should ensure revenue stream for at least four years.
Targeting mid-income income earners.
e
SPALI’s products are
considered mid-end with an average selling price of about
Bt2.5m, where demand remains strong. The following table
shows SPALI’s products under various brands.
SPALI’s products under various brands
Brand
ASP
Detached House/Townhouse
(Btm/unit)
Supalai Suvarnabhumi 6-10
Supalai Orchid Park 3-5
Supalai Parkville 3-4
Supalai Ville 2-3
Condominium
(Bt/sqm)
Supalai Casa Riva 60,000-65,000
Supalai Place 50,000-60,000
Supalai Park 40,000-50,000
City Home 35,000-40,000
Source: Company, DBS Vickers
- Construction Commenced
Source: Company, DBS Vickers
(ii) Office for Rent
Operating one office tower for rent. SPALI owns and
operates one office tower called “Supalai Grand Tower” for
rent. The project is a 34-storey office tower located on Rama
III Road, with total lettable area of 42,000 sqm. As of 30 Jun
2009, occupancy rate was around 50% of the total lettable
area.
(iii) Hotel & resort
- Transfer of ownership
- 100% of Revenue Recognized
Operating two hotels. SPALI owns and operates two hotels in
Thailand. The first one is a 138-room hotel called Supalai
Pasak Resort and Spa, which is located in Saraburi province.
The other is a 182-room resort Hotel called Supalai Resort
and Spa Phuket which is managed by Best Western
International under its “Best Western Premier” brand.
Page 4

Company Focus
Supalai
Supalai’s strategic locations
Source: Company
Page 5

Company Focus
Supalai
Competitive Strengths
Diversified product mix. The company now has 31 ongoing
residential property projects worth Bt16.3bn in strategic
locations in Greater Bangkok. These projects cover all types of
residential property development (detached houses,
townhouses, duplexes, and condominium), which are
targeting at mid-income earners, with an average unit price
of Bt2.5m.
31 ongoing projects (Sep 2009)
Project Type
Units
Total
Value (Btm)
Remaining
(Btm)
Condo - completed 8,644 21,879 2,543
Condo - under construction 7,557 13,937 3,620
Detached house 6,253 20,813 7,247
Townhouse 3,805 10,136 2,932
Total 26,259 66,765 16,342
Source: Company, DBS Vickers
Rising market share. Based on the number of housing units
(both low-rise and high-rise) transferred, SPALI’s market share
has increased significantly during the past five years, from
only 1.5% in 2005 to as high as 7.1% in 1H09. The jump in
market share was due mainly to the strong jump in the
number of SPALI’s condominium units transferred during the
last five years.
SPALI’s rising market share in residential property market
8%
7%
6%
5%
4%
3%
2%
1%
0%
2005 2006 2007 2008 1H09
Source: Company, DBS Vickers
Note: SPALI’s market share is calculated by using SPALI’s no. of
housing units registered divided by total units transferred by housing
developers.
Huge Bt13bn backlog ensuring future revenue stream. Total
backlog (cumulative sales awaiting transfers) amounted to
Bt13bn at end-Sep 2009, of which Bt2.5bn will be realized in
4Q09, Bt5.6bn in 2010, and Bt4.9bn in 2011. This means
4Q09 result should continue to be strong. SPALI’s
cancellation & reject rates are also quite low compared to the
industry. Current cancellation & reject rates are only 3% for
condominium and about 10.5% for low-rise products.
Backlog (cumulative sales awaiting transfers)
Btm
10000
8000
6000
4000
2000
0
Source: Company, DBS Vickers
Presales (contracted value) showing continued recovery. After
hitting its trough in 4Q08 due to political instability, SPALI’s
presales have recovered steadily since 1Q09. We expect 4Q09
presales to jump on both q-o-q and y-o-y with three new
condominium projects to be launched in 4Q09.
Presales continued to recover
Btm
3,500
3,000
2,500
2,000
1,500
1,000
500
0
5,925
2,859
952
2,487
2,207
4,528
5,620
1,755 1,774
2,502
3Q08 4Q08 1Q09 2Q09 3Q09
4,880
2008 2009 2010 2011
Cumulative Sales Awaiting To Transfer
Sales Transferred in 3Q09
Revenue Recognized
Source: Company, DBS Vickers
Page 6

Company Focus
Supalai
3 new condominium projects launch in 4Q09 to help boost
presales and backlog. SPALI plans to launch three
condominium projects worth Bt4.7bn in 4Q09, comprising
two in Bangkok and one in downtown Phuket. Given the
good locations, 4Q09 presales (bookings) should jump again
following the launches.
Planned launches for 4Q09
Project Name
Area
(Rai)
Value
(Btm)
Price/Unit
(Btm)
High Rise
1. Dindaeng 4 1,340 1.5 up
2. Ratchayothin 9 2,200 1.5 up
3. Downtown Phuket 5 1,200 1.0 up
Grand Total 18 4,740
Source: Company, DBS Vickers
Secured land bank for future launches. SPALI has secured 12
plots of land for next year’s launches. These will comprise
eight low-rise (detached house and townhouse) projects
worth Bt5.6bn, and four condominium projects worth
Bt7.0bn.
Land banks to be developed from 2010 onwards
Location
Project
Area
(Rai)
Area
(Acres)
Value
(Btm)
1. Phaholyothin 54/1 Low Rise (DH) 11 5 200
2. Phoholyothin 50 Low Rise (DH) 25 11 500
3. Ramindra Low Rise (DH) 29 13 560
4. Phuket Low Rise (DH) 37 17 600
5. Phathumthani Low Rise (DH) 65 30 980
6. Rama II Low Rise (DH) 169 77 2,090
7. Saimai Low Rise (TH) 15 7 290
8. Nonthaburi Low Rise (TH) 25 11 400
9. Rama III High Rise 3 1 600
10. Lasal High Rise 12 5 1,500
11. Petchkasem High Rise 6 3 1,580
12. Charoennakorn High Rise 14 6 3,300
Total 411 186 12,600
Source: Company, DBS Vickers
Solid management team. SPALI’s top management has been
in the property development business for more than 30 years.
Given its long experience industry, SPALI has been able to
grow its market share, revenue, and profit impressively and
now rises to be one of the leading residential property
developers in Thailand.
Superior margins. SPALI has always achieved superior gross
and net profit margin compared to the industry, thanks to its
superior cost management via in-house professionals,
efficient designs, and effective cost control. In 1H09, the
company’s gross margin was about 45%, the highest
compared to the industry’s average of about 34%. The
superior margins have been consistent over the last five years
(2004-2008), when the company could achieve average gross
margin of 42% (vs industry average of 32%), and net margin
of 20% (vs industry average of 14%). We expect gross
margin to come down from an extra-ordinary high level in
1H09 to the company’s normal range of 40% next year, but
still be relatively high compared to the industry.
SPALI’s superior gross margin
50%
45%
40%
35%
30%
25%
20%
4Q05
2Q06
Source: DBS Vickers
Key Risks
4Q06
2Q07
4Q07
2Q08
SPALI
Industry
Rising raw material costs. Rising raw material costs could
negatively affect the company’s cost and margin.
Nonetheless, SPALI has effective construction cost control
techniques throughout the production chain whereby
contractors are given a lump sum amount for labour and raw
materials. Contractors are committed to procure most of raw
materials while the company buys some materials at discount
from manufacturers or large-sized distributors. SPALI also
closely monitors raw material prices and if necessary, a large
quantity of the material would be procured for higher
bargaining power.
Interest rate risks. A significant rise in local interest rate could
undeniably negatively impact demand and raise the
company’s interest costs. Nonetheless, we currently expect
interest rate to increase by only about 50bps next year, which
is still a bit low compared to history. In addition, SPALI has
recently managed to issue Bt1bn bond with 3.5 year maturity,
which should help lock in the currently low interest cost for
the next 3.5 years.
4Q08
2Q09
Page 7

Company Focus
Supalai
Industry Outlook
Positive outlook. We see positive outlook for the residential
property sector in 4Q09 and 1Q10, supported by (i)
favourable demand vs supply situation, (ii) the low interest
rates environment, (iii) rebounding consumer confidence, and
(iv) an improving economy. Historical data suggests housing
demand correlates strongly with GDP growth and consumer
confidence. Given expectations of economic recovery in 2H09
and 2010, consumer confidence and subsequently residential
property demand should also improve.
Demand is also falling, but at a smaller magnitude.
According to AREA, total number of housing units sold
dropped 27% y-o-y to 27,004 units in 1H09. We expect the
industry’s housing units sold to fall 15% y-o-y to about
55,805 units in 2009. Average selling price is expected to
increase 22% to Bt3.3m per unit in 2009, due mainly to the
increase contribution of more mid-end products closer to
the city centres in 2009.
Breakdown of total housing units sold in 1H09
(i) Favourable demand vs supply situation
New supply falling fast. According to the Agency for Real
Estate Affairs (AREA), total number of newly launched units
in Greater Bangkok fell 48% y-o-y to 20,258 units and is
expected to fall 40% for the entire year from 2008 to
40,675 units in 2009. In terms of value, that of new
developments dropped 23% y-o-y to Bt67.0bn in 1H09, and
is expected to drop 28% from 2008. Total cumulative
inventory in the market dropped 6% from end-2008 to
104,066 units at end-1H09 due to the sharp fall in supply.
Detached
House
21%
Townhouse
20%
Source: AREA, DBS Vickers
Duplex
8% Shophouse
3%
Condominium
48%
Supply is falling faster than demand
Units
250,000
200,000
New launch
Units sold
Supply change
Demand change
150%
100%
150,000
100,000
50%
0%
-50%
50,000
-100%
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009F
-150%
Source: AREA
Page 8

Company Focus
Supalai
(ii) Interest rates to stay flat until 3Q10
Interest rates to remain low. The Monetary Policy
Committee (MPC) has aggressively cut the policy interest
rate by 125bps in 1Q09 and another 25bps to 1.25% in Apr
2009. Local commercial banks have also cut MLR to about
5.875% currently. We expect local interest rates to stay flat
at current level until 3Q10, when we expect the MPC to
start to increase the policy rate by 25bps to 1.50%. With
interest rates to remain flat at least in the next six months,
we see this as positive for the property sector.
Interest rates to remain low
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Source: BoT, Reuters, DBS Vickers
(iii) Rebounding consumer confidence
Consumer confidence rebounding. According to data from
the University of Thai Chamber of Commerce, local
Consumer Confidence Index (CCI) has rebounded for four
consecutive months since Jun 2009.
Consumer Confidence Rebounding
88
86
84
82
80
78
76
74
72
70
13.8% 15.3%
15.0%
13.2%
11.5%
12.8% 8.5%
11.3% 12.0% 11.8% 11.5% 7.5%7.5% 7.8%
5.8% 6.9% 7.3%
5.8% 6.0%
5.9%
7.8% 6.8%
7.0%
5.8% 5.8%
4.3%
3.0% 4.0% 5.8% 5.3%
Jan-06
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Aug 09
May-06
MLR
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Mortgage rate
Sep-08
Jan-09
May-09
Sep-09
Developers Sentiment Index rebounds. According to Real
Estate Information Centre, which surveys listed and nonlisted
housing developers, the Housing Developers Sentiment
Index (HDSI) has been falling since 2Q08, and hit bottom in
4Q08 before rebounding steadily since 1Q09.
The 6-Month Expectation Index has also improved from
40.2% in 4Q08 to 50.4% in 1Q09, 62.2% in 2Q09, and
69.9 in 3Q09.
Housing Developers’ Sentiment Index rising
70
60
50
40
30
20
10
0
Listed
Non-Listed
Current Situation Index
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09
Source: NESDB, DBS Vickers
(iv) An improving economy
Thailand’s GDP expected to improve in 2H09 and 2010. We
believe Thailand’s economy has already bottomed out in
1H09 and GDP should turn positive y-o-y growth from 4Q09
onwards. Our economist forecasts Thailand’s GDP will
recover strongly from a contraction of 3.2% in 2009 to
4.0% growth in 2010.
Thailand: Annual GDP Growth (y-o-y)
y)
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
1998
1999
2000
2001
Source: NESDB, DBS Vickers
2002
2003
2004
2005
2006
2007
2008
2009F
2010F
Source: BoT, Reuters, DBS Vickers
Page 9

Company Focus
Supalai
Changing criteria for BOI housing projects. On 10 Jun, the
Board of Investment (BOI) had agreed to relax the criteria for
BOI housing projects in Zone 1 (Bangkok and 5 other
provinces including Samut Prakan, Samut Sakhon, Nakhon
Pathom, Nonthaburi and Pathum Thani). There is no change
on promotional criteria for projects located in Zone 2 and 3.
BOI Investment Promotion Zones
About the change. The changes include (i) minimum no. of
units in the projects (from 150 to 50 units), (ii) maximum
selling price per unit (from Bt0.6m to Bt1.0m for
condominium and to Bt1.2m for detached houses and
townhouses), and (iii) minimum usable area (from 31 sqm
to 28 sqm for condominium and 70 sqm for detached
houses and townhouses).
Changing criteria for BOI housing projects in Zone 1
Criteria
Existing
New
1. Minimum units 150 50
2. Minimum usable area (sqm)
- Condominium 31 28
- Detached houses & townhouses 31 70
3. Maximum selling prices (Btm)
- Condominium 0.6 1.0
- Detached houses & townhouses 0.6 1.2
Source: DBS Vickers
Reasons for the change. Based on BOI’s assessment, the
housing projects located in Zone 1 are subject to rising land
and construction material costs (which make up about 70-
80% of total cost), and increasing wages. The BOI
therefore sees it necessary to increase the housing selling
price criteria from Bt0.6m to Bt1.0m for condominium and
Bt1.2m for detached houses and townhouses to match the
current situation. This is to enable low-income earners to
own housing in Bangkok and its vicinities. As for projects
located in zone 2 and zone 3, the BOI sees no necessity for
criteria adjustment given that land prices in those locations
have not increased much compared to those in zone 1.
Zone 1 : includes Bangkok, Samut Prakan, Samut Sakhon, Nakhon
Pathom, Nonthaburi and Pathum Thani (Bangkok and 5
provinces)
Zone 2 : includes Ang Thong, Ayutthaya, Chachoengsao, Chon Buri,
Kanchanaburi, Nakhon Nayok, Phuket, Ratchaburi, Rayong,
Samut Songkhram, Saraburi, and Suphanburi (12 provinces)
Zone 3 : encompasses the remaining 58 provinces
Source: BoI
Positive for SPALI. The relaxed housing criteria benefits
SPALI in the sense that the company can apply for BOI
promotional privileges on the company’s projects that fit
into the BOI’s relaxed criteria. Revenue from the BOI
approved projects is tax-free for 5 years. This means
SPALI’s effective tax rate could come down from next year
onwards. Nonetheless, we expect revenue contribution
from the BOI approved projects to be quite small at no
more than 10-15% in the short- to medium-term.
Page 10

Company Focus
Supalai
Quarterly / Interim Performance
1H09 net profit already exceeded 2008 profit. SPALI’s 1H09
net profit totalled Bt1.2bn. This already exceeded the net
profit of Bt1.07bn made for the entire of 2008. The strong
growth was due mainly to (i) the strong 45% jump in
realized revenue, (ii) the wider gross profit margin from 40%
in 1H08 to about 45% in 1H09 due to contribution of highmargin
condominium projects, and (iii) the tax-savings from
the government’s tax-cut package since 29 Mar 2008. Note
that the government has introduced the tax-cut package
since 29 Mar 2008 and has extended the package for
another one year until 28 Mar 2010. Under the tax-cut
package, specific business tax, transfer fees, and mortgage
rates will come down. This result in a substantial 4.2% of
sales tax savings by all developers.
Improving balance sheet. Cash flows from operations
improved sharply to Bt1.1bn in 1H09. Net gearing also
dropped steadily from 92% at end-2008 to 64% at end-
1H09.
Summary of property tax cut package
For Developers & Home buyers
Specific Business
Tax
Normal
Tax Incentives
3.30% 0.11% 29 Mar 08 -
28 Mar 10
Transfer Fees 2.00% 0.01% 30 Mar 08 -
28 Mar 10
Mortgage
Registration Fees
Total tax savings Developers
1.00% 0.01% 31 Mar 08 -
28 Mar 10
Home Buyers 2.0%
For Home buyers
Actual payment to purchase
property
Interest paid on mortgage
loans
Source: Company, DBS Vickers
4.2% of sales
Amount deductible from
taxable income
Who pays
Developer
Developer-
Buyer
Buyer
Expiry Date
300,000 baht 31-Dec-09
100,000 baht Ongoing
Quarterly / Interim Income Statement (Bt
m)
FY Dec
3Q2008
4Q2008
1Q2009
2Q2009
2009
Turnover 1,297 1,559 2,039 2,502
Cost of Goods Sold (797) (973) (1,134) (1,368)
Gross Profit 500 587 904 1,134
Other Oper. (Exp)/Inc (130) (128) (124) (144)
Operating Profit 370 459 780 990
Other Non Oper. (Exp)/Inc 32 35 26 32
Associates & JV Inc 0 0 0 0
Net Interest (Exp)/Inc (22) (26) (26) (25)
Exceptional Gain/(Loss) (50) 0 0 0
Pre-tax Profit 330 467 781 998
Tax (116) (262) (235) (300)
Minority Interest (10) 10 (5) (11)
Net Profit 204 215 541 686
Net profit bef Except. 254 215 541 686
EBITDA 421 512 826 1,043
Sales Gth (%) (40.0) 20.2 30.7 22.7
EBITDA Gth (%) (44.4) 21.6 61.3 26.2
Operating Profit Gth (%) (48.3) 24.0 70.0 27.0
Net Profit Gth (%) (57.1) 5.2 151.5 26.9
Gross Margins (%) 38.5 37.6 44.4 45.3
Operating Margins (%) 28.5 29.4 38.3 39.6
Net Profit Margins (%) 15.8 13.8 26.5 27.4
Source: Company, DBS Vickers
Page 11

Company Focus
Supalai
Financials – Income Statement
FY09F earnings expected to surge 102% y-o-y, y
y, highest in the
industry. We estimate SPALI’s earnings to grow 102% y-o-y
to Bt2.3bn, the highest in its history. This is mainly on the
back of (i) the strong 49% jump in realized revenue, (ii) the
wider gross profit due to contribution of high-margin
condominium projects, and (iii) the tax-savings from the
government’s tax-cut package since 29 Mar 2008. Such
strong earnings growth is the highest in the industry.
FY10F earnings could ease, but still very strong. Given the
anticipated strong earnings growth in FY09F, coupled with
the scheduled expiration of the government’s tax-cut
package in Mar 2010, we estimate SPALI’s earnings could
ease, but still very strong at Bt2.1bn in FY10F.
If property-tax tax cut package is extended, it could boost our
FY10-FY11F FY11F earnings. We assumed that the property-tax cut
package would not be extended when it expires in late Mar
2010. But if it is, our FY10F earnings could be lifted by 10%
and 4%, respectively.
Sales Trend
Operating Cost Trend
Profitability Trend
Bt m
10,000
8,000
6,000
4,000
2,000
0
2007A 2008A 2009F 2010F 2011F
Total Revenue
Revenue Growth (%) (YoY)
50.9%
45.9%
40.9%
35.9%
30.9%
25.9%
20.9%
15.9%
10.9%
5.9%
7000
6000
5000
4000
3000
2000
1000
0
2007A 2008A 2009F 2010F 2011F
Other Operating Expenses (-)
Cost of Goods Sold (-)
2000
1500
1000
500
0
2007A 2008A 2009F 2010F 2011F
Net Profit (After-extraordinaries )
Net Profit Growth (%) (YoY)
110%
90%
70%
50%
30%
10%
(10%)
FY Dec (Bt
m) 2006A 2007A 2008A 2009F 2010F 2011F
Turnover 4,518 4,796 5,998 8,939 9,768 10,689
Cost of Goods Sold (2,608) (2,871) (3,647) (5,051) (5,861) (6,414)
Gross Profit 1,910 1,925 2,350 3,889 3,907 4,276
Other Opg (Exp)/Inc (595) (564) (546) (564) (890) (1,080)
Operating Profit
1,315 1,193 1,804 3,325 3,017 3,196
Other Non Opg (Exp)/Inc 118 100 75 105 105 129
Associates & JV Inc 0 0 0 0 0 0
Net Interest (Exp)/Inc (48) (79) (102) (101) (91) (102)
Exceptional Gain/(Loss) 0 0 0 0 0 0
Pre-tax Profit 1,390 1,214 1,778 3,328 3,031 3,223
Tax (473) (383) (691) (1,002) (887) (902)
Minority Interest (37) (15) (18) (26) (27) (29)
Preference Dividend 0 0 0 0 0 0
Net Profit 880 816 1,069 2,300 2,116 2,292
Net profit before Except. 880 816 1,069 2,300 2,116 2,292
EBITDA 1,476 1,359 1,955 3,515 3,217 3,430.4
Sales Gth (%) 34.6 6.2 25.0 49.0 9.3 9.4
EBITDA Gth (%) 39.8 (7.9) 43.9 79.7 (8.5) 6.6
Operating Profit Gth (%) 40.0 (9.2) 51.2 84.2 (9.2) 5.9
Net Profit Gth (%) 5.9 (7.2) 30.9 115.2 (8.0) 8.3
Gross Margins (%) 42.3 40.1 39.2 43.5 40.0 40.0
Opg Margins (%) 29.1 24.9 30.1 37.2 30.9 29.9
Net Profit Margins (%) 19.5 17.0 17.8 25.7 21.7 21.4
% of Opg Expenses to Sales 13.2 15.3 9.1 6.3 9.1 10.1
Effective Tax Rate (%) 34.0 31.6 38.9 30.1 29.3 28.0
Source: Company, DBS Vickers
Page 12

Company Focus
Supalai
Financials – Balance Sheet
• Successfully issued Bt1bn domestic bond recently. In Sep
2009, SPALI issued Bt1bn bond locally. The 3.5-year bond
carries a coupon rate of 4.35% per annum. Proceeds are
mainly for refinancing. This should help lock in the low
interest rate cost for the next 3.5 years.
• Net gearing to come down sharply by end-2009.
We
expect SPALI’s net gearing to come down sharply from 64%
at end 1H09 to 48% by end-2009. This is on the back of (i)
the expected strong profit in 2H09, and (ii) the potential cash
inflow and gain from the planned sale of 120m repurchased
shares in 4Q09 via public offering. Looking forward, net
gearing should continue to come down to 47% at end-2010
and 45% at end-2011.
Breakdown of Assets (2009
(
2009) Breakdown of Capital C
(2009(
2009) Financial Leverage & Net Debt to Equity
Inventory -
77.0%
Bank,
Net Cash
Fixed and
Assets -
Liquid
Debtors - Assets -
0.0%
Common
Shareholde
s' Equity -
50.2%
ST
Debt -
5,100
4,600
4,100
3,600
3,100
2,600
2,100
LT
1,600
Debt - 1,100
2007A 2008A 2009F 2010F 2011F
2.6
2.1
1.6
1.1
0.6
0.1
Net Debt/(Cash)
Financial Leverage (X) (R.H.S)
Net Debt to Equity (X) (R.H.S)
FY Dec (Bt
m) 2006A 2007A 2008A 2009F 2010F 2011F
Net Fixed Assets 1,249 1,350 1,352 1,322 1,280.0 1,238
Invts in Assocs & JVs 0 0 0 0 0 0
Other LT Assets 438 237 188 188 188 188
Cash & ST Invts 116 152 101 112 189 280
Inventory & Land Bank 6,130 8,646 11,240 13,471 15,455 17,448
Debtors 0 0 0 0 0 0
Other Current Assets 378 238 592 593 593 594
Total Assets 8,311 10,623 13,473 15,686 17,705 19,748
ST Debt 1,680 1,465 3,542 1,763 1,763 1,763
Other Current Liab 1,602 2,218 3,195 4,379 4,773 5,017
LT Debt 562 2,145 1,441 2,000 2,500 3,000
Other LT Liabilities 4 5 5 5 5 5
Shareholder’s Equity 4,207 4,529 5,031 7,278 8,403 9,703
Minority Interests 257 261 260 260 260 260
Total Cap. & Liab. 8,311 10,623 13,473 15,686 17,705 19,748
Total Debt 2,241.3 3,610.0 4,982.7 3,763.4 4,263.4 4,763.4
Net Cash / (Debt) (2,125) (3,458) (4,882) (3,651) (4,075) (4,483)
Coverage Ratios (x)
Net Interest Cover 27.3 15.2 17.8 32.9 33.2 31.2
Free Cashflow to interest Exp nm nm nm 5.7 nm nm
Leverage Analysis (x)
EBITDA Gross Interest Cover 30.7 17.3 19.2 34.7 35.4 33.5
Total Debt to EBITDA 1.5 2.7 2.5 1.1 1.3 1.4
Total Debt to Total Assets 0.3 0.3 0.4 0.2 0.2 0.2
Total Debt to Capital 0.5 0.8 0.9 0.5 0.5 0.5
Net Debt to Equity 0.5 0.7 0.9 0.5 0.5 0.4
Net Debt to Equity ex MI 0.5 0.8 1.0 0.5 0.5 0.5
Capex to Debt 0.1 0.0 0.0 0.0 0.0 0.0
Liquidity Analysis (x)
Cash Ratio 0.0 0.0 0.0 0.0 0.0 0.0
Current Ratio 2.0 2.5 1.8 2.3 2.5 2.7
Quick Ratio 0.0 0.0 0.0 0.0 0.0 0.0
Source: Company, DBS Vickers
Page 13

Company Focus
Supalai
Financials – Cash Flow
Cash flow improving. We expect SPALI’s operating cash flow
should increase sharply to Bt1.3bn in 2009 (from negative
operating cash flow in 2008) , due to the strong jump in
condominium and housing transfer in 2009.
… and should remain strong. Looking forward, cash flow
should remain strong, despite our assumptions that the
company will need to spend about Bt2.5-3.0bn on land
acquisition during each of the next few years. This is to
ensure continuous project launches and future revenue
growth.
Cash Flow Trend
Free Cash Flow Per Share
Free Cash Flow As At Year End
2,911
1.81
2,411
1,911
1,411
911
411
1.31
0.81
0.31
2,500
2,000
1,500
-89
-589
-1,089
2007A 2008A 2009F 2010F 2011F
(0.19)
(0.69)
2007A 2008A 2009F 2010F 2011F
1,000
500
CF from Op CF from Invt CF from Fin
Free Cash Flow Per ShareFree Operating Cash Flow
2007A 2008A 2009F 2010F 2011F
FY Dec (Bt
m) 2006A 2007A 2008A 2009F 2010F 2011F
Pre-Tax Profit 1,390 1,214 1,778 3,328 3,031 3,223
Dep. & Amort. 38 66 76 86 96 106
Tax Paid (473) (383) (691) (1,002) (887) (902)
Assoc. & JV Inc/(loss) 0 0 0 0 0 0
Chg in Wkg.Cap. (306) (1,721) (1,502) (1,138) (1,691) (1,850)
Other Operating CF 2 (1) 89 18 27 17
Net Operating CF 614 (833) (275) 1,292 575 592
Capital Exp.(net) (255) (171) (81) (24) (24) (24)
Other Invts.(net) 22 2 1 0 0 0
Invts in Assoc. & JV 0 0 0 0 0 0
Div from Assoc & JV 0 0 0 0 0 0
Other Investing CF 10 12 18 17 17 17
Net Investing CF (223) (157) (61) (8) (8) (8)
Div Paid (635) (403) (479) (687) (991) (992)
Chg in Gross Debt (398) 1,378 870 (1,219) 500 500
Capital Issues 681 50 174 0 0 0
Other Financing CF 0 0 (280) 634 0 0
Net Financing CF (353) 1,026 285 (1,272) (491) (492)
Net Cashflow 39 36 (51) 12 76 93
Opg CFPS (Bt) 0.6 0.6 0.8 1.4 1.3 1.4
Free CFPS (Bt) 0.2 (0.6) (0.2) 0.7 0.3 0.3
Source: Company, DBS Vickers
Page 14

Company Focus
Supalai
Financial Ratios (%)
(
• Gross margin to remain strong. We expect SPALI’s gross
margin to jump to as high as 43.5% in 2009 due to the
contribution of higher-margin condominium projects, before
coming down to a more sustainable level at 40% in 2010
and 2011. Nonetheless this is still relatively high compared
with the industry’s average at about 34%.
• High ROE. We expect SPALI’s ROE to jump to as high as
37.4% in 2009 due to the strong jump in earnings, before
coming down to 27.0% in 2010 and 25.3% in 2011, both of
which are still relatively strong.
ROAE / ROAA Trend (%) Margin Trend (%)
Total Debt & Gross Interest Cover
38.0%
33.0%
28.0%
23.0%
18.0%
13.0%
8.0%
2007A 2008A 2009F 2010F 2011F
Ret on Avg Equity (ROAE) %
Ret on Avg Assets (ROAA) %
40%
35%
30%
25%
20%
15%
10%
0
EBITDA Margin % EBIT Margin % Net Income Margin %
2007A 2008A 2009F 2010F 2011F
6000
5000
4000
3000
2000
1000
2007A 2008A 2009F 2010F 2011F
Total Debt (+) Gross Interest Cover (X) (YoY)
30.9x
28.9x
26.9x
24.9x
22.9x
20.9x
18.9x
16.9x
14.9x
12.9x
FY Dec 2006A 2007A 2008A 2009F 2010F 2011F
Profitability Ratios
Sales Growth (%) 34.6 6.2 25.0 49.0 9.3 9.4
Gross Margin (%) 42.3 40.1 39.2 43.5 40.0 40.0
Operating Margin (%) 29.1 24.9 30.1 37.2 30.9 29.9
Net Profit Margin (%) 19.5 17.0 17.8 25.7 21.7 21.4
Financial Leverage (x) 1.9 2.2 2.5 2.1 2.0 2.0
Tax Retention Rate (%) 66.0 68.4 61.1 69.9 70.7 72.0
Sustainable Growth (%) 12.0 9.5 11.6 22.0 14.8 13.9
ROAE (%) 23.2 18.7 22.4 37.4 27.0 25.3
ROA (%) 11.2 8.6 8.9 15.8 12.7 12.2
ROCE (%) 13.5 10.8 11.8 21.5 17.6 16.6
Activity Ratios
Debtors Turn (average days) N/A N/A N/A N/A N/A N/A
Creditors Turn (average days) 42.5 56.3 61.2 57.3 61.9 63.6
Inventory Turn (average days) 794.1 961.3 1,016.1 908.3 915.7 951.9
Total Asset Turnover (x) 0.6 0.5 0.5 0.6 0.6 0.6
Fixed Asset Turnover (x) 6.6 3.7 4.4 6.7 7.5 8.5
Asset Replacement Ratio (x 6.8 2.6 1.1 0.3 0.3 0.2
Source: Company, DBS Vickers
Page 15

Company Focus
Supalai
Share price performance
A strong out-performer YTD. SPALI’s share price has jumped
185% YTD, significantly out-performing the SET Index’s
51% gain and the SET Property Index’s 87% surge. This
could be attributed to the company’s improving
fundamentals, as well as the anticipated strong earnings
growth for this year.
Valuation
Attractive valuation. Despite the share price rally, SPALI
trading at only 4.4x 2010 PE, still cheap compared to its
peers. It also offers generous 2010 dividend yield of 10.2%
(payable semi-annually).
PE Band
(iii) SPALI is no longer a small cap. Its market capitalization is
now US$280m compared to about US$100m at the end of
last year, making it more appealing to larger funds.
(iv) Liquidity has improved. Trading liquidity has also
improved from about US$0.5m/day last year to about
US$1.4m/day YTD.
(v) No more warrants outstanding.
Previous concerns about
potential share dilution arising from SPALI’s warrants have
eased as there are no more warrants outstanding.
Fair value of Bt7.65. We value SPALI at Bt7.65, based on the
estimated RNAV. The bulk of its valuation is mainly on (i) its
inventory and land bank, and (ii) its office tower called SPALI
Grand Tower on Rama III Road.
PE (x)
10
9
8
7
6
5
4
3
2
1
-
(1) 02 03 04 05 06 07 08 09
+2 sd
+1 sd
Mean
-1 sd
-2 sd
RNAV Calculation
Unit: Btm
Cash 338
A/R 1
Inventory & Land Bank 18,575
Supalai Grand Tower 1,700
Total assets 20,614
Total liabilities (7,479)
Net asset value 13,135
No. of shares (m) 1,717
RNAV/share (Bt) 7.65
Source: DBS Vickers
Source: DBS Vickers
The stock deserves re-rating
rating. We believe SPALI should
continue to re-rate for the following reasons:
(i) Current valuation is still cheap. At only 4.4x 2010 PE,
SPALI is offering much higher earnings growth of 102% and
more generous 2010 dividend yield of 10.2%, at much
lower earnings multiple compared to its peers.
(ii) Strong jump in market share over the past 5 years.
SPALI’s market share growth in the last five years was the
strongest in the industry. Based on the number of housing
units transferred in Greater Bangkok area, SPALI’s market
share expanded from only 1.5% in 2005 to 7.5% in 1H09.
Page 16

Company Focus
Supalai
Residential Property Comparison
Mkt
Price
Target % PE
PE
PBV
EV/EBITDA
Div Yield
ROE
Bloomberg
Company
Cap
(Bt)
Price
Upside
(x)
(x)
(x)
(x) (%) (x)
Code
(US$m)
2 Nov (Bt)
09F
10F
09F
09F
09F
09F
Mid/Large Cap
LH TB Land & Houses 1,696 5.65 6.85 21% 14.3 15.3 2.1 12.6 5.6 15.0
PS TB Preuksa Real Estate 1,028 15.60 16.77 8% 10.9 9.7 2.7 8.3 2.8 27.7
AP TB Asian Property Dev. 391 5.60 8.00 43% 7.7 7.7 1.7 7.0 4.6 23.3
QH TB Quality Houses 635 2.50 2.83 13% 13.0 11.6 1.7 13.1 3.4 13.6
LPN TB L.P.N. Development 309 7.00 7.61 9% 7.4 8.3 2.0 5.6 6.7 28.9
SPALI TB Supalai 280 5.45 7.65* 41% 4.1 4.4 1.2 3.8 10.1 37.4
Small Cap
SIRI TB Sansiri 178 4.04 4.29 6% 8.8 6.6 0.7 2.5 4.5 10.7
PF TB Property Perfec 94 4.00 6.20 55% 7.8 4.5 0.5 10.0 4.5 6.1
MK TB M.K. Real Estate Dev. 65 2.50 2.82 13% 4.4 4.9 0.5 3.5 7.2 10.9
LALIN TB Lalin Property 53 2.16 1.94 -10% 8.4 7.5 0.5 7.3 4.7 6.0
NOBLE TB Noble Development 52 3.84 4.85 26% 4.2 4.8 0.5 7.3 7.2 11.5
PRIN TB Prinsiri 59 1.95 2.03 4% 4.8 4.9 0.7 8.1 2.1 15.3
Average 8.0 7.5 1.2 7.4 5.3 17.2
*Fair Value
Source: Company, DBS Vickers
Page 17

Company Focus
Supalai
Income Statement (Bt
(
m) Balance Sheet (Bt
(
m)
FY Dec 2008A 2009F 2010F 2011F
FY Dec 2008A 2009F 2010F 2011F
Turnover 5,998 8,939 9,768 10,689 Net Fixed Assets 1,352 1,322 1,280 1,238
Cost of Goods Sold (3,647) (5,051) (5,861) (6,414) Invts in Associates & JVs 0 0 0 0
Gross Profit 2,350 3,889 3,907 4,276 Invt & Devt Properties N/A N/A N/A N/A
Other Opng (Exp)/Inc (546) (564) (890) (1,080) Other LT Assets 12 12 12 12
Operating Profit 1,804 3,325 3,017 3,196 Cash & ST Invts 101 112 189 280
Other Non Opg (Exp)/Inc 75 105 105 129 Dev Props held for sale 0 0 0 0
Associates & JV Inc 0 0 0 0 Inventory 11,240 13,471 15,455 17,448
Net Interest (Exp)/Inc (102) (101) (91) (102) Debtors 0 0 0 0
Exceptional Gain/(Loss) 0 0 0 0 Other Current Assets 592 593 593 594
Pre-tax Profit 1,778 3,328 3,031 3,223 Total Assets 13,473 15,686 17,705 19,748
Tax (691) (1,002) (887) (902)
Minority Interest (18) (26) (27) (29) ST Debt 3,542 1,763 1,763 1,763
Preference Dividend 0 0 0 0 Other Current Liab 3,195 4,379 4,773 5,017
Net Profit 1,069 2,300 2,116 2,292 LT Debt 1,441 2,000 2,500 3,000
Net Profit before Except. 1,069 2,300 2,116 2,292 Other LT Liabilities 5 5 5 5
EBITDA 1,955 3,515 3,217 3,430 Shareholder’s Equity 5,031 7,278 8,403 9,703
Minority Interests 260 260 260 260
Sales Gth (%) 25.0 49.0 9.3 9.4 Total Cap. & Liab. 13,473 15,686 17,705 19,748
EBITDA Gth (%) 43.9 79.7 (8.5) 6.6
Opg Profit Gth (%) 51.2 84.2 (9.2) 5.9 Non-Cash Wkg. Capital 8,637 9,685 11,275 13,025
Net Profit Gth (%) 30.9 115.2 (8.0) 8.3 Net Cash/(Debt) (4,882) (3,651) (4,075) (4,483)
Effective Tax Rate (%) 38.9 30.1 29.3 28.0
Cash Flow Statement (Bt
(
m) Rates & Ratio
FY Dec 2008A 2009F 2010F 2011F
FY Dec 2008A 2009F 2010F 2011F
Pre-Tax Profit 1,778 3,328 3,031 3,223 Gross Margins (%) 39.2 43.5 40.0 40.0
Dep. & Amort. 76 86 96 106 Opg Profit Margin (%) 30.1 37.2 30.9 29.9
Tax Paid (691) (1,002) (887) (902) Net Profit Margin (%) 17.8 25.7 21.7 21.4
Assoc. & JV Inc/(loss) 0 0 0 0 ROAE (%) 22.4 37.4 27.0 25.3
Chg in Wkg.Cap. (1,502) (1,138) (1,691) (1,850) ROA (%) 8.9 15.8 12.7 12.2
Other Operating CF 89 18 27 17 ROCE (%) 11.8 21.5 17.6 16.6
Net Operating CF (275) 1,292 575 592 Div Payout Ratio (%) 48.2 41.0 45.0 45.0
Capital Exp.(net) (81) (24) (24) (24) Net Interest Cover (x) 17.8 32.9 33.2 31.2
Other Invts.(net) 1 0 0 0 Asset Turnover (x) 0.5 0.6 0.6 0.6
Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) N/A N/A N/A N/A
Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 61.2 57.3 61.9 63.6
Other Investing CF 18 17 17 17 Current Ratio (x) 1.8 2.3 2.5 2.7
Net Investing CF (61) (8) (8) (8) Quick Ratio (x) 0.0 0.0 0.0 0.0
Div Paid (479) (687) (991) (992) Net Debt/Equity (X) 0.9 0.5 0.5 0.4
Chg in Gross Debt 870 (1,219) 500 500 Net Debt/Equity ex MI (X) 1.0 0.5 0.5 0.5
Capital Issues 174 0 0 0 Capex to Debt (%) 1.6 0.6 0.6 0.5
Other Financing CF (280) 634 0 0 Z-Score (X) 2.2 2.2 2.8 2.7
Net Financing CF 285 (1,272) (491) (492) N. Cash/(Debt)PS (Bt) (2.8) (2.1) (2.4) (2.6)
Net Cashflow (51) 12 76 93 Opg CFPS (Bt) 0.8 1.4 1.3 1.4
Free CFPS (Bt) (0.2) 0.7 0.3 0.3
Quarterly / Interim Income Statement (Bt
m) Segmental Breakdown / Key Assumptions
FY Dec
3Q2008
4Q2008
1Q2009
2Q2009
2009 FY Dec 2008A 2009F 2010F 2011F
Turnover 1,297 1,559 2,039 2,502 Revenues (Bt
m)
Cost of Goods Sold (797) (973) (1,134) (1,368) Condominium 3,059 5,560 6,050 6,600
Gross Profit 500 587 904 1,134 Townhouses 900 1,035 1,138 1,252
Other Oper. (Exp)/Inc (130) (128) (124) (144) Detached Houses 2,039 2,345 2,580 2,838
Operating Profit 370 459 780 990 Total 5,998 8,939 9,768 10,689
Other Non Opg (Exp)/Inc 32 35 26 32 Sales Breakdown
Associates & JV Inc 0 0 0 0 Condominium 51% 62% 62% 62%
Net Interest (Exp)/Inc (22) (26) (26) (25) Townhouses 15% 12% 12% 12%
Exceptional Gain/(Loss) (50) 0 0 0 Detached Houses 34% 26% 26% 27%
Pre-tax Profit 330 467 781 998 Total 100% 100% 100% 100%
Tax (116) (262) (235) (300) Sales Growth
Minority Interest (10) 10 (5) (11) Condominium 16% 82% 9% 9%
Net Profit 204 215 541 686 Townhouses 134% 15% 10% 10%
Net profit bef Except. 254 215 541 686 Detached Houses 15% 15% 10% 10%
EBITDA 421 512 826 1,043 Total 25% 49% 9% 9%
Sales Gth (%) (40.0) 20.2 30.7 22.7 Key Assumptions
EBITDA Gth (%) (44.4) 21.6 61.3 26.2 Sales (Btm) 5,998 8,939 9,768 10,689
Opg Profit Gth (%) (48.3) 24.0 70.0 27.0 Sales Growth 25% 49% 9% 9%
Net Profit Gth (%) (57.1) 5.2 151.5 26.9 Gross Margin 39.2% 43.5% 40.0% 40.0%
Gross Margins (%) 38.5 37.6 44.4 45.3 SGA/Sales 8.3% 6.2% 6.0% 5.8%
Opg Profit Margins (%) 28.5 29.4 38.3 39.6 Spec. Tax & Transfer fees 0.8% 0.1% 3.1% 4.3%
Net Profit Margins (%) 15.8 13.8 26.5 27.4 Tax Rate 38.9% 30.1% 29.3% 28.0%
Div. Payout 45% 41% 45% 45%
Source: Company, DBS Vickers
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DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10 to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative ( total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends
DBS Vickers Research is available on the following electronic platforms: DBS Vickers (www.dbsvresearch.com); Thomson
(www.thomson.com/financial); Factset (www.factset.com); Reuters (www.rbr.reuters.com); Capital IQ (www.capitaliq.com) and Bloomberg
(DBSR GO). For access, please contact your DBSV salesperson.
GENERAL DISCLOSURE/DISCLAIMER
This document is published by DBS Vickers Securities (Thailand) Co., Ltd. (“DBSVT”), a direct wholly-owned subsidiary of DBS Vickers
Securities Holdings Pte Ltd ("DBSVH"). [This report is intended for clients of DBSV Group only and no part of this document may be (i)
copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of DBSVT.]
The research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty as
to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for
general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial
situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken
in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. DBSVT accepts no liability
whatsoever for any direct or consequential loss arising from any use of this document or further communication given in relation to this
document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. DBSVH is a whollyowned
subsidiary of DBS Bank Ltd. DBS Bank Ltd. along with its affiliates and/or persons associated with any of them may from time to
time have interests in the securities mentioned in this document. DBS Vickers Research (Singapore) Pte Ltd (“DBSVR”), DBS Vickers
Securities (Singapore) Pte Ltd (“DBSVS”), DBS Bank Ltd and their associates, their directors, and/or employees may have positions in, and
may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other
banking services for these companies.
The assumptions for commodities in this report are for the purpose of forecasting earnings of the companies mentioned herein. They are
not to be construed as recommendations to trade in the physical commodities or in futures contracts relating to the commodities
mentioned in this report.
DBS Vickers Securities (USA) Inc ("DBSVUSA”), a U.S.-registered broker-dealer, does not have its own investment banking or research
department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US
persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any
security discussed in this document should contact DBSVUSA exclusively.
ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
companies and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of
his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of
3 Nov 2009, the analyst and his / her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the
securities recommended in this report (“interest” includes direct or indirect ownership of securities, directorships and trustee positions).
COMPANY-SPECIFIC / REGULATORY DISCLOSURES
1. DBS Vickers Securities (Thailand) Co., Ltd. and its subsidiaries do not have a proprietary position in the mentioned
company as of 2 Nov 2009
2. DBSVT, DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBSVUSA, may beneficially own a total of 1% or more of
any class of common equity securities of the mentioned company as of 3 Nov 2009.
3. Compensation for investment banking services:
i. DBSVT, DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBSVUSA may have received compensation, within
the past 12 months, and within the next 3 months receive or intends to seek compensation for investment banking
services from SPALI.
ii. DBSVUSA does not have its own investment banking or research department, nor has it participated in any
investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to
obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in
any security discussed in this document should contact DBSVUSA exclusively.
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Company Focus
Supalai
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This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or
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Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person
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In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for
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Rama 1 Road, Pathumwan, Bangkok Thailand 10330
Tel. 66 2 657 7831, Fax: 66 2 658 1269
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