Small/Mid Cap Strategy and Stock Picks - the DBS Vickers ...

Regional Small/Mid Cap Strategy Q2 2008
Preuksa Real Estate
Bloomberg: PS TB | Reuters: PS.BK
BUY Bt10.70 SET : 820.31
Price Target : 12-month Bt 12.26
Potential Catalyst: (i) Rebounding consumer confidence, (ii) earnings
jump boosted by tax savings from government’s property tax-cut
stimulus package
Analyst
Chanpen Sirithanarattanakul +66 0 2657 7824
chanpens@th.dbsvickers.com
Price Relative
11 . 70
10 . 70
9 . 70
8 . 70
7 . 70
6 . 70
5 . 70
4 . 70
3 . 70
Bt
Dec - 05 Jun - 06 Dec - 06 Jun - 07 Dec - 07
Relative Index
Preuksa Real Estate ( LHS ) Relative SET INDEX ( RHS )
Forecasts and Valuation
FY Dec (Bt m) 2006A 2007A 2008F 2009F
Turnover 8,181 9,088 11,465 13,826
EBITDA 1,725 1,800 2,558 2,670
Pretax Profit 1,578 1,603 2,393 2,503
Net Profit 1,303 1,270 1,914 2,003
EPS (Bt) 0.60 0.58 0.88 0.92
EPS Gth (%) 0.1 (2.8) 50.3 4.6
P/E (x) 17.8 18.4 12.2 11.7
P/Cash Flow (x) 22.0 21.8 40.2 23.6
EV/EBITDA (x) 13.8 13.0 9.3 8.8
DPS(Bt) 0.20 0.22 0.26 0.27
Div Yield (%) 1.9 2.1 2.5 2.6
ROE (%) 17.8 15.5 19.9 18.1
Net Gearing (%) 7.9 1.7 3.0 1.2
Book Value (Bt) 3.38 3.75 4.40 5.05
P/Book Value (x) 3.2 2.9 2.4 2.1
Consensus EPS (Bt) 0.8 0.9
Sector : Property
Principal Business: Residential property development
219
169
119
69
19
Deserves re-rating
Story: PS is the largest residential property developer in
Thailand in terms of market share (16%) and second
largest in terms of market capitalization. It focuses on lowto
mid-priced townhouses and detached houses. In 2007,
The PS successfully expanded into the city condominium
market.
Point: PS’ presales rocketed to a record high of Bt13.6bn in
2007, due to its aggressive new project launches and
expansion into the condominium market. And prospects
remain positive. Sales should continue to grow with 40
new projects to be launched this year, compared to 28 last
year. The company will start to realize revenue from its two
condominium projects that had been sold out since last
year. The company is also a prime beneficiary of the
government’s tax cut package, thanks to its large inventory
on hand. We estimate that PS should see its EPS jump
50% this year, fuelled by strong housing sales and tax
savings from the government’s stimulus package.
Relevance: Valuations are undemanding at 12.2x FY08 PE
given its strong EPS CAGR of 25.4% for FY07-09F. We reiterate
our BUY rating for PS premised on (i) strong
earnings growth prospects, (ii) a quality management team,
(iii) strong balance sheet, and (iv) attractive valuation. Our
target price is Bt12.26 based on 14x FY08 PE. PS is now our
top pick in the residential property sector.
At A Glance
Issued Capital (m shrs) 2,186
Mkt. Cap (Btm/US$m) 23,390 / 743
Major Shareholders
Vichitrpongpan’s family (%) 73.9
HSBC (Singapore) Nominees Pte Ltd (%) 5.8
Thailand Equity Fund (%) 4.9
Free Float (%) 21.8
Avg. Daily Vol.(‘000) 2,217
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Refer to important disclosures at the end of this report