AP: More growth ahead February 15, 2018

Stellar showing in FY17

AP reported a set of strong presales numbers in FY17. Total presales clocked in at Bt42.9bn, which was 65% above its target of Bt26bn thanks largely to stronger-than expected condo presales on the back of an overwhelming response for its newly launched condo projects and a 9% beat in SDH/TH presales. Revenue came in line with its target at Bt22bn while revenue at its JV with  Mitsubishi Real Estate also matched its target at Bt6.2bn.

FY17 profit seen up 14% y-y

We expect AP to deliver profit growth of 14% y-y to Bt3bn in FY17 from Bt2.7bn in FY16 on the back of rising revenue, stable margins, tight expense controls and higher profit from JV. For the year, revenue is estimated to be 7% higher than a year earlier at Bt21bn while the share of profit from JV is projected to rise 26% y-y to Bt466mn from Bt370mn a year ago. We also forecast AP to shell out a dividend of Bt0.37/share for FY17.

FY18 revenue growth target set at 9% though presales set to drop 22% in line with new project launch plan

AP plans to roll out 34 new projects this year, up from 24 projects last year but the total value of new project launches is on par with last year at Bt49bn. Under the plan, much of the focus will shift to SDH/TH rather than condo launches as reflected by a 20% increase in the value of new SDH/TH launches to Bt30bn this year from Bt25bn last year. The value of new condo launches on the other hand drops by 21% to Bt19bn this year from Bt24bn last year. With the above new project launch plan, management has guided for a drop of 22% y-y in FY18 total presales on expectations that (i) SDH/TH presales will rise 21% y-y, and (ii) condo presales will drop 45% y-y. Even though presales are expected to drop in FY18, management has set a revenue growth target of 9% to Bt23.2bn for FY18, of which around Bt6bn would come from backlog carried over from end-FY17 into FY18 and the rest from SDH/TH revenue and sales of condo inventories earned during the year. For its JV with Mitsubishi Real Estate, the revenue target is set at Bt8bn for FY18, of which around Bt7.4bn or 93% has already been covered by backlog.

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