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THAILAND EQUITY RESEARCH  

Page | 1 | PHILLIP SECURITIES (THAILAND)  

Supalai Margin holds key to profit growth in FY16 THAILAND | SET | PROP | COMPANY RESULTS BLOOMBERG SPALI TB l REUTERS SPALI.BK  3QFY15 profit down 35% y‐y SPALI made a 3QFY15 profit of Bt1,024mn, down 35% from Bt1,580mn  in 3QFY14 as a result of faltering revenue and margin.  In this period, revenue plunged 20% y‐y to Bt4.6bn due  largely to the delay  in ownership  transfers at Supalai Prima Riva  to  take advantage of  the government’s recently released property stimulus package in early 4QFY15. Margin shrank to 38% in this period from 44%  in the same period  last year, dragged down by  low margins from Supalai Wellington. However, 3QFY15 results beat our forecasts as margins came in above our forecast of 37% at 38%.   FY15 profit  seen down 1%  y‐y, dragged down by margin weakness  from  Supalai Wellington despite estimated revenue growth of 15% driven by backlog For the whole of FY15, we forecast a 1% y‐y profit drop for SPALI hit by margin weakness from Supalai Wellington  despite  backlog‐driven  revenue  growth.  Our  forecast  assumes  (i)  full‐year revenue will  grow  15%  y‐y  to  Bt21bn  based  on  assumptions  that  SPALI  currently  has  around Bt20.5bn  in  revenue  on hand,  of which Bt10.5bn would  come  from backlog  to  be  realized  as revenue  in 2HFY15 and  the  rest Bt9.9bn  from    revenue  realized  in 1HFY15, and  (ii) margin will narrow to 37% in FY15 from 41% in FY14, weighed down by low‐margin Supalai Wellington.   Profit poised for return to positive growth of 6% helped by improving margin outlook Following an expected profit drop  in  FY15, we  see  scope  for SPALI  to  return  to positive profit growth of 6% in FY16 largely helped by the prospect of a margin pickup. We assume flat revenue for  SPALI  in  FY16.  Currently  there would  be  a  condo  backlog  of  around Bt11bn  to  be  carried forward to FY16. To meet FY16 revenue target, therest should come from sales of existing condo inventories ready for transfer in FY16 at Bt3.5bn and revenue to be realized from SDH/TH presales in FY16 at Bt6.5bn. Our forecast puts FY16 SDH/TH presales growth at 5%.    ‘BUY’ rating with Bt24.80/share target price We retain a ‘BUY’ call on SPALI shares wtih a FY16 target price of Bt24.80/share based on 9x FY16 P/E. The ‘BUY’ rating reflects (i) our expectations for the profit growth comeback in FY16  driven by the  strength  of  its  backlog  and  improving  margin  outlook  and  (ii)  its  compelling  valuation. Currently SPALI is trading at below 7x FY16 P/E and a dividend yield of roughly 5%.  

                      

Ref. No.: CO2015_0863  

Closing Price(Bt) 18.80Target Price(Bt) 24.80 (+31.91%)

COMPANY DATA

O/S Shares (mn) : 1,717    Market Cap. (Btmn) :Market Cap. (USDmn) :52‐WK Hi/Lo (Bt) : 28/153M Average Daily T/O (mn) : 5.28Par Value (Bt) : 1.00

MAJOR SHAREHOLDERS (%)

1. Prateep TangmatiTham 23.32.  Thai NVDR 7.33. Atchara Tangmatitham 5.3

PRICE PERFORMANCE (%)

1MTH 3MTH 1YRABS ‐2% 17% ‐23%REL TO SET INDEX ‐4% 19% ‐12%

PRICE VS SET INDEX

Source: Bloomberg, PSR

KEY FINANCIALS

FYE Dec FY13 FY14 FY15E FY16ESales(Btmn) 12,615 18,591 21,726 21,783Net Profit(Btmn) 2,882 4,478 4,428 4,718EPS (Bt) 1.68 2.61 2.58 2.75P/E (X) 11.2 7.2 7.3 6.8BVPS (Bt) 8.44 10.29 11.72 12.73P/B (X) 2.2 1.8 1.6 1.5DPS (Bt) 0.70 1.00 1.03 1.10Dividend Yield (%) 3.7 5.3 5.5 5.8ROE  (%) 21.58 28.27 23.72 22.71Debt/Equity (X) 1.97 1.71 1.87 1.92

Source: Company, PSR Est.**Multiples and yields are based on latest closing price

VALUATION METHOD

P/E'16 (9x)

Danai Tunyaphisitchai, CFACapital Market Investment Analyst # 2375Tel: 66 2 635 1700 # 481

32,271                                              896                                                      

26 August 2015

Buy (Maintain)

19 November 2015

0

10

20

30

Nov‐12 Nov‐13 Nov‐14 Nov‐15

SPALI TB EQUITY SETI (rebased)

THAILAND EQUITY RESEARCH  

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Supalai COMPANY RESULTS

Income StatementBtmn 3Q15 2Q15 3Q14 q‐q+/‐ y‐y+/‐ 9M15 9M14 y‐y+/‐Sa l e s  and  s e rvi ces 4,642 5,036 5,789 ‐8% ‐20% 14,598 11,468 27%Renta l  i ncome 96 80 80 20% 21% 267 243 10%Cos ts  of s a l e s   2,842 3,136 3,222 ‐9% ‐12% 9,125 6,552 39%Cos t of renta l 61 54 51 14% 21% 165 147 12%Gross profit 1,836 1,927 2,596 ‐5% ‐29% 5,576 5,013 11%Se l l i ng  & admin  expenses 513 594 558 ‐14% ‐8% 1,630 1,288 27%Operating profit  1,323 1,333 2,038 ‐1% ‐35% 3,945 3,725 6%Other i ncome 62 37 18 67% 244% 119 59 101%Ga in/l os s  from  a ffi l i a te s ‐5 ‐4 0 ‐10% n.m. ‐13 n.m.Other expense 0 0 0 n.m. n.m. n.m.EBIT 1,381 1,366 2,056 1% ‐33% 4,051 3,784 7%Inte re s t expense 73 65 49 11% 48% 202 137 48%EBT 1,308 1,300 2,007 1% ‐35% 3,849 3,647 6%Taxa ti on 262 268 409 ‐2% ‐36% 779 724 8%EAT 1,046 1,032 1,599 1% ‐35% 3,070 2,923 5%Minori ty 22 67 18 ‐68% 17% 177 72 148%Net profit before extra 1,024 965 1,580 6% ‐35% 2,893 2,851 1%Extraordina ry i tems 0 0 0 n.m. n.m. 0 0 n.m.Net profit  1,024 965 1,580 6% ‐35% 2,893 2,851 1%EPS  (Bt) 0.60 0.56 0.92 7% ‐35% 1.69 1.66 2%

Key Financial Ratio% 3Q15 2Q15 3Q14 q‐q+/‐ y‐y+/‐ 9M15 9M14 y‐y+/‐Cos t of s a l e s /s a le s   61.26% 62.35% 55.76% ‐2% 10% 62.49% 57.20% 9%SG&A exp/s a l e s   10.82% 11.61% 9.51% ‐7% 14% 10.97% 11.00% 0%Gros s  margin 38.74% 37.65% 44.24% 3% ‐12% 37.51% 42.80% ‐12%Opera ti ng profi t margin 27.92% 26.05% 34.73% 7% ‐20% 26.54% 31.80% ‐17%Net profi t ma rgin 21.61% 18.87% 26.92% 15% ‐20% 19.46% 24.35% ‐20%

Balance Sheet Btmn 3Q15 2Q15 3Q14 q‐q+/‐ y‐y+/‐ 9M15 9M14 y‐y+/‐As s e ts 42,640 41,435 37,443 3% 14% 42,640 37,443 14%Lia bi l i ti e s 23,654 22,598 21,128 5% 12% 23,654 21,128 12%Pa id ‐up  (mn  s hrs ) ‐ Pa r Bt1 1,717 1,717 1,717 0% 0% 1,717 1,717 0%Equi ti e s 18,986 18,837 16,316 1% 16% 18,986 16,316 16%BVPS  (Bt) 11.06 10.97 9.50 1% 16% 11.06 9.50 16%Debt/equi ty (x) 1.2 1.2 1.3 4% ‐4% 1.2 1.3 ‐4%Source : Company, PSR

THAILAND EQUITY RESEARCH  

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Corporate Governance ‐2014

BAFS BCP BTS CPN EGCO GRAMMY HANA INTUCH IRPC TOPKBANK KKP KTB MINT PSL PTT PTTEP PTTGC SAMART IVLSAT SC SCB SE‐ED SIM SPALI TISCO TMB THCOM SAMTEL

AAV ACAP ADVANC ANAN AOT ASIMAR ASK ASP BANPU BAYBBL BECL BIGC BKI BLA BMCL BROOK CENTEL CFRESH CIMBTCK CNT CPF CSL DELTA DRT DTAC DTC EASTW EEERW GBX GC GFPT GUNKUL HEMRAJ HMPRO ICC KCE KSLLANNA LH LHBANK LOXLEY LPN MACO MC MCOT NBC NCHNINE NKI NMG NSI OCC OFM PAP PE PG PHOLPJW PM PPS PR PRANDA PS PT QH RATCH ROBINSRS S & J SAMCO SCC SINGER SIS SITHAI SNC SNP SPISSF SSI SSSC STA SVI TCAP TF THAI THANI TSTETIP TIPCO TK TKT TNITY TNL TOG TRC TRUETSTH TTA TTW TVO UAC VGI VNT WACOAL

2S AF AH AHC AIT AJ AKP AKR AMANAH AMARINAMATA AP APCO APCS AQUA ARIP AS ASIA AYUD BEAUTYBEC BFIT BH BJC BJCHI BOL BTNC BWG CCET CGDCGS CHOW CI CKP CM CMR CSC CSP CSS DCCDEMCO DNA EA ESSO FE FORTH FPI GENCO GL GLOBALGLOW GOLD HOTPOT HTC HTECH HYDRO IFS IHL INET IRCIRCP ITD KBS KGI KKC KTC L&E LRH LST MAJORMAKRO MATCH MBK MBKET MEGA MFC MFEC MJD MODERN MONOMOONG MPG MTI NC NTV NUSA NWR NYT OGC OISHIPACE PATO PB PDI PICO PPM PPP PREB PRG PRINPTG QLT QTC RCL SABINA SALEE SCBLIF SCCC SCG SEAFCOSEAOIL SFP SIAM SIRI SKR SMG SMK SMPC SMT SOLARSPC SPCG SPPT SST STANLY STEC STPI SUC SWC SYMCSYNEX SYNTEC TASCO TBSP TEAM TFD TFI THANA THIP THRELTIC TICON TIW TKS TLUXE TMI TMT TNDT TPC TPCORPTRT TRU TSC TTCL TUF TVD TWFP UMI UP UPFUPOIC UT UV UWC VIH WAVE WHA WIN WINNER YUASAZMICO

Score Range

THAILAND EQUITY RESEARCH  

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Industry Group Name Sector Name Sector IndexAgro & Food Industry[AGRO]  Agribusiness AGRI

Food & Beverage FOODConsumer Products[CONSUMP] Fashion FASHION

Home & Office Products HOMEPersonal Products & Pharmaceuticals PERSON

Financials [FINCIAL] Banking BANKFinance & Securities FINInsurance INSUR

Industrials [INDUS] Automotive AUTOIndustrial Materials & Machinery IMMPackaging PKGPaper & Printing Materials PAPERPetrochemicals & Chemicals PETROSteel STEEL

Property & Construction[PROPCON] Construction Materials CONMATConstruction Services CONS Property Development PROPProperty Fund & REITs PF&REIT 

Resources [RESOURC] Energy & Utilities ENERGMining MINE

Services [SERVICE] Commerce COMMMedia & Publishing MEDIAHealth Care Services HELTHTourism & Leisure TOURISMProfessional Services PROFTransportation & Logistics TRANS

Technology [TECH] Electronic Components ETRONInformation & Communication Technology ICT

PSR Rating SystemCapital Gain Recommendation      > +10% Buy     0% to + 10% Neutral       

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