Date: October 29, 2024
Broker: UOB Kay Hian

3Q24 Core Profit and Revenue Performance

Origin Property (ORI) is projected to experience an improvement in core profit for the third quarter of 2024 on a quarter-on-quarter (qoq) basis, stemming from a low base in the previous quarter. However, year-on-year (yoy), ORI’s core profit is expected to decline due to transfer challenges and the absence of bulk sales, which had previously bolstered earnings.

Transfers and Project Contributions

ORI’s transfers for 3Q24 are expected to decline both yoy and qoq, primarily attributed to the lack of bulk sales during the quarter. The company’s new condo projects have supported transfers to some extent, but overall transfer volume remains lower compared to prior quarters, reflecting the competitive and cautious environment in the high-rise segment.

Residential Gross Margin Improvement

Despite lower transfer volumes, ORI’s residential gross margin is anticipated to improve on both yoy and qoq bases, supported by a favorable product mix in transfers. This improvement in gross margin demonstrates ORI’s effective management of its project portfolio, optimizing profitability despite slower transfer activity.

Equity Income and New Project Impact

ORI’s equity income is expected to benefit from two newly completed condo projects, which contribute positively to the company’s overall earnings. These projects offer a promising outlook for ORI’s balance sheet and revenue growth as they begin to generate returns.

Market Position and Sector Outlook

In its sector analysis, UOB Kay Hian maintains a “Market Weight” rating on the Thai property sector. ORI’s performance reflects sector-wide challenges, particularly in attracting buyers amid tighter economic conditions. ORI’s strategic focus on enhancing gross margins and leveraging new projects provides some resilience in a subdued market environment.

Risks and Strategic Considerations

Key risks for ORI include ongoing challenges in achieving higher transfer volumes, particularly in the high-rise segment. Additionally, tightening lending conditions and economic uncertainty pose potential risks to the company’s financial performance. ORI may need to continue adjusting its product mix and sales strategies to navigate the competitive landscape and sustain profitability.