Supalai PCL (SPALI): Stellar profit growth seen for 3QFY17 November 1, 2017

  • 3QFY17 profit seen up 129% y‐y: We expect SPALI to deliver stellar earnings growth in 3QFY17, helped by strong revenue, GPM and an extra‐item from selling its office building in the Philippines.
  • 3QFY17 revenue expected to grow 67% y‐y: 3QFY17 total revenue is likely to arrive at Bt7.5bn, mainly bolstered by revenue from Supalai Loft Changwattana and Supalai Veranda Ratchavipha condo projects. As a result, we estimate condo revenue in this period will skyrocket to 167% to Bt4bn. On the low‐rise front, SDH/TH revenue is expected to grow 27% to Bt3.5bn thanks chiefly to a 20% increase in SDH/TH presales in the first nine months of the year.
  • Improved GMP and gain from office sale: We estimate 3QFY17 net profit will increase from Bt847mn a year ago to Bt1,943mn on an expectation that SPALI will recognize a gain of around Bt200mn from its office building sale in the Philippines. GPM is projected to improve y‐y on an assumption that condo revenue in this period will rise to 54% from 33% in 3QFY16.
  • ‘ACCUMULATE’ rating: We still like SPALI due to its optimistic profit outlook which looks set to continue into FY18 and likely impressive 3Q earnings. There remains room, for further upside as SPALI is currently trading at a discount to its historical P/E average with a target price of Bt26/share.

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