Regional Morning Notes: Comprehensive Company Analysis
Regional Morning Notes: Comprehensive Company Analysis
Broker: UOB Kay Hian
Date: Monday, 11 November 2024
WHA Corporation (WHA TB): Detailed Analysis
Company Overview
WHA Corporation is a prominent leader in providing one-stop logistics services. The company has diversified its operations across four main business hubs: logistics, industrial development, utilities & power, and digital platforms. This holistic approach has positioned WHA as a significant player in the real estate sector.
Stock Performance
The company’s share price is currently Bt6.00, with a target price set at Bt6.90, indicating a potential upside of 15.0%. Despite a 52-week high of Bt5.60 and a low of Bt4.54, the market cap stands at Btm 77,723.5 (US\$m 2,202.5). Major shareholders include Miss Jareeporn Jarukornsakul (23.3%), Miss Chatchamol Anantaprayoon (9.0%), and Mr. Chaiwat Phupisut (4.6%).
3Q24 Performance
WHA reported a net profit of Bt459m for 3Q24, which was significantly lower than expected, falling short by 54% of UOB Kay Hian’s estimates and 48% below consensus. This shortfall was attributed to higher SG&A-to-sales ratios, lower margins, forex losses, and higher tax expenses. Revenue also decreased year-on-year (yoy) and quarter-on-quarter (qoq), mainly due to reduced land transfers in the industrial estate (IE) business.
Financial Breakdown
Metrics |
3Q24 |
3Q23 |
2Q24 |
yoy Change |
qoq Change |
Net Turnover (Btm) |
2,049 |
2,116 |
2,322 |
-3.1% |
-11.8% |
Gross Profit |
994 |
1,006 |
1,228 |
-1.2% |
-19.0% |
EBIT |
568 |
564 |
778 |
0.9% |
-27.0% |
EBITDA |
808 |
745 |
1,003 |
8.5% |
-19.5% |
Net Profit |
459 |
623 |
1,289 |
-26.3% |
-64.4% |
EPS (Bt) |
0.43 |
0.58 |
1.21 |
-26.3% |
-64.3% |
Key Financials
Year |
2022 |
2023 |
2024F |
2025F |
2026F |
Net Turnover (Btm) |
13,729 |
14,875 |
17,648 |
18,304 |
19,405 |
EBITDA |
4,765 |
5,513 |
5,719 |
6,124 |
6,691 |
Operating Profit |
4,155 |
4,803 |
5,347 |
5,729 |
6,268 |
Net Profit (adj.) |
4,046 |
4,446 |
5,225 |
5,784 |
6,289 |
EPS (Bt) |
0.3 |
0.3 |
0.3 |
0.4 |
0.4 |
Stock Impact
Revenue from the IE business was particularly affected by revenue-sharing agreements with IRPC Public Company. WHA transferred 370 rai of land in Thailand and Vietnam, but only recognized 171 rai due to sharing agreements. Despite these challenges, the company saw increased share of profit from associates and the sale of properties.
Revenue Growth in Other Segments
WHA reported strong revenue growth in other business segments, including rental properties and utilities & power. The rental properties business saw a 43% yoy and 19% qoq increase, driven by higher lease areas, better occupancy rates, and rental income from Mobilix. The utilities and power business also performed well, with a 10% yoy and 5% qoq increase in revenue.
Gross Margin Analysis
The company’s total gross margin increased by 0.9 ppt yoy to 48.5%, primarily due to better margins from the utilities business. However, the qoq gross margin dropped by 4.3 ppt, mainly due to pressures from the industrial estate business.
Interim Dividend Payment
WHA announced an interim dividend payment of Bt0.0669/share for 1H24, implying an attractive dividend yield of 1.115%. The ex-dividend date is set for 21 Nov 24, with payment scheduled for 6 Dec 24.
Future Outlook
Management expects strong land presales and transfers in 4Q24, with a target of at least 2,200 rai, equivalent to 2023 levels. The company is also optimistic about the continued strong sentiment for Thai industrial estates in 2025.
Earnings Revision
UOB Kay Hian has revised WHA’s 2024 earnings up by 10%, factoring in higher-than-expected share of profit from associates and improved gross margins. The 2025 earnings have also been adjusted upwards due to anticipated higher gross margins.
Valuation and Recommendation
UOB Kay Hian maintains a BUY recommendation with a higher target price of Bt6.90, up from the previous Bt6.50. The target price is based on the Sum-of-the-Parts (SOTP) methodology, valuing WHA’s investment in associate companies at Bt1.45/share and its core business at Bt5.10/share.
Environmental, Social, and Governance (ESG) Highlights
- Environmental: WHA focuses on sustainable business operations, including biodiversity, wastewater quality, waste management, air pollution, and resource conservation.
- Social: The company integrates the vision of “Future of Work” to foster inclusivity and personal and professional development among its workforce.
- Governance: WHA emphasizes transparency, accountability, responsibility, and fairness in its corporate governance principles.
Quarterly Land Sales and Transfers Outlook
WHA expects strong land presales and transfers in 4Q24, with targeted land presales of around 750 rai and land transfers between 600-700 rai. The company remains confident in achieving its 2024 targets and anticipates continued strong sentiment for Thai industrial estates into 2025.
Revenue Breakdown for 2024
The company projects significant contributions from various segments, including rental properties, utilities & power, and the industrial estate business. The diversified revenue streams are expected to support WHA’s growth outlook for 2024 and beyond.
Profit and Loss Projections
Metrics |
2023 |
2024F |
2025F |
2026F |
Net Turnover (Btm) |
14,875 |
17,648 |
18,304 |
19,405 |
EBITDA |
5,513 |
5,719 |
6,124 |
6,691 |
Deprec. & Amort. |
709 |
372 |
395 |
423 |
EBIT |
4,803 |
5,347 |
5,729 |
6,268 |
Net Profit (adj.) |
4,446 |
5,225 |
5,784 |
6,289 |
Balance Sheet Projections
Metrics |
2023 |
2024F |
2025F |
2026F |
Fixed Assets (Btm) |
42,940 |
30,986 |
31,590 |
32,168 |
Other LT Assets |
27,990 |
29,234 |
30,147 |
30,891 |
Cash/ST Investment |
6,530 |
8,975 |
10,623 |
13,146 |
Other Current Assets |
12,764 |
23,230 |
23,845 |
25,334 |
Total Assets |
90,225 |
92,424 |
96,205 |
101,540 |
Cash Flow Projections
Metrics |
2023 |
2024F |
2025F |
2026F |
Operating (Btm) |
6,107 |
(3,778) |
6,206 |
6,270 |
Pre-tax Profit |
5,728 |
6,724 |
7,453 |
8,007 |
Tax |
(659) |
(958) |
(1,049) |
(1,178) |
Deprec. & Amort. |
709 |
372 |
395 |
423 |
Key Metrics
Metrics |
2023 |
2024F |
2025F |
2026F |
EBITDA Margin |
37.1% |
32.4% |
33.5% |
34.5% |
Pre-tax Margin |
38.5% |
38.1% |
40.7% |
41.3% |
Net Margin |
29.9% |
29.6% |
31.6% |
32.4% |
Turnover Growth |
8.3% |
18.6% |
3.7% |
6.0% |
EBITDA Growth |
15.7% |
3.7% |
7.1% |
9.2% |