Thailand Property Sector Insights: An In-Depth Analysis

Date: Thursday, 28 November 2024

Broker: UOB Kay Hian Securities (Thailand)

Introduction

In the latest market report, UOB Kay Hian Securities (Thailand) delves deep into the property sector of Thailand, offering a detailed analysis of key players and market trends. This comprehensive review focuses on the expected performance improvements in the fourth quarter of 2024, while also acknowledging persistent challenges. Let’s explore individual company performances, predictions, and strategic recommendations.

AP (Thailand) – A Promising Prospect

AP (Thailand) is highlighted as a top pick in the property sector, with a recommendation to buy. The company showed resilience with a current price of 8.60 Baht and a target price of 11.30 Baht, indicating a 31% upside potential. Despite a slight decrease in residential revenue by 4.5% year-on-year for the first nine months of 2024, AP is praised for its strategic presales and project launches.

AP’s presales in the third quarter stood at 13,418 million Baht, reflecting a 15% year-on-year increase but a 7% quarter-on-quarter decline. The company’s focus on medium- to high-priced projects is expected to sustain its margins despite the challenging market environment.

Land and Houses – Holding Steady

With a recommendation to hold, Land and Houses has a current price of 5.40 Baht and a target price of 6.00 Baht, offering an 11% upside. The company experienced a significant drop in residential revenue by 14.4% year-on-year in the first nine months of 2024. Despite these challenges, Land and Houses managed a slight quarter-on-quarter growth in presales, reaching 4,764 million Baht.

Land and Houses is focusing on managing its inventory efficiently and is cautiously optimistic about market recovery, although high household debt remains a concern.

LPN Development – Facing Challenges

LPN Development is recommended as a sell, with a current price of 2.84 Baht and a target price of 2.10 Baht, indicating a 26% downside. The company has faced substantial hurdles, with a 19.6% decline in core profit for the first nine months of 2024. LPN’s presales dropped by 24% quarter-on-quarter to 2,168 million Baht, highlighting the challenges in maintaining sales momentum.

Despite challenges, LPN is striving to stabilize its SG&A-to-sales ratio, aiming for more efficient operations in a competitive market landscape.

Origin Property – Holding Back

Origin Property is also rated as hold, with both current and target prices at 4.10 Baht. The company has seen a significant decrease in presales by 32% year-on-year, reaching 8,486 million Baht in the third quarter. Despite these challenges, Origin maintains a cautious approach with a focus on high-value projects.

Origin’s efforts to manage its project launches and pricing strategy are crucial as it navigates a market with weak purchasing power and high competition.

Pruksa Holding – Strategic Adjustments

Pruksa Holding is another company facing headwinds, with a sell recommendation. The current price is 8.35 Baht, with a target price of 6.60 Baht, reflecting a 21% downside. The company’s presales declined by 28% year-on-year to 3,694 million Baht in the third quarter.

Pruksa aims to focus on selective project launches and is adjusting its strategies to target buyers with stronger purchasing power, given the high construction costs impacting profit margins.

Quality Houses – Cautious Optimism

Quality Houses is recommended to hold, with a current price of 1.81 Baht and a target price of 1.82 Baht. The company managed a slight 0.1% increase in residential revenue quarter-on-quarter, with presales reaching 1,670 million Baht, down 28% from the previous quarter.

Quality Houses is focusing on managing its project pipeline carefully, with an emphasis on maintaining steady gross margins amid economic uncertainties.

Supalai – A Standout Performer

Supalai is recognized for its robust performance, with a hold recommendation and a current price of 19.20 Baht, aiming for a target of 20.30 Baht. With a notable 24.1% quarter-on-quarter growth in residential revenue and an 8% increase in presales to 6,703 million Baht, Supalai demonstrates strong market positioning.

The company’s strategic focus on a diverse project mix and efficient transfer activities has allowed for a rebound in gross margins, making it a standout performer in the sector.

Conclusion

The Thailand property sector is navigating through a complex landscape, marked by both opportunities and challenges. While some companies like AP (Thailand) and Supalai are strategically positioned for growth, others face significant hurdles. As the sector anticipates improved presales momentum in the fourth quarter of 2024, the focus remains on strategic project launches, pricing strategies, and managing economic headwinds. Investors are advised to adopt a selective approach, with careful consideration of individual company strategies and market conditions.