Date: October 29, 2024
Broker: UOB Kay Hian

3Q24 Profit Performance

Pruksa Holding (PSH) is forecasted to report a net profit of Bt325 million in the third quarter of 2024, reflecting a 17% year-on-year (yoy) decline and a modest 4% quarter-on-quarter (qoq) increase. The marginal qoq improvement is primarily attributed to non-residential revenue streams, including land sales and increased revenue from the hospital business, which is entering its high season.

Residential Transfers and Presales Challenges

PSH’s residential transfers are expected to remain under pressure due to weak presales in the quarter. The company has not launched any new condo projects in 3Q24, impacting its ability to drive growth in the high-rise segment. This limited project activity has placed additional constraints on revenue generation from residential properties.

Gross Margin Impact from Promotional Campaigns

The residential gross margin for PSH is projected to decline slightly qoq to 30%, reflecting the product mix within its transfer portfolio. Ongoing promotional campaigns to stimulate sales have impacted the gross margin, but they remain necessary to sustain market presence and drive consumer interest in a competitive environment.

Diversification with Non-Residential Revenue Streams

While the residential market remains challenging, PSH benefits from diversification through land sales and a growing healthcare business. The hospital segment, in particular, is expected to contribute positively to PSH’s 3Q24 revenue as it enters its peak season, supporting the company’s overall financial performance amid soft residential market conditions.

Market Position and Sector Outlook

UOB Kay Hian maintains a “Market Weight” rating on the Thai property sector, reflecting a cautious outlook due to economic headwinds and tighter consumer spending. Within this environment, PSH’s strategy of balancing residential and non-residential revenue streams is highlighted as a prudent approach to sustaining growth, despite a weaker presales outlook.

Risks and Strategic Considerations

Key risks for PSH include continued pressure on residential presales and the potential for further gross margin erosion if promotional activities persist at high levels. Tighter lending conditions and elevated operational costs could also pose challenges. As PSH navigates these factors, its diversification into healthcare and land sales remains a critical element of its resilience strategy in an uncertain market.