Our call shifts down from BUY to HOLD with a new YE22 target price of Bt1.90 (down from Bt3, due to profit forecast cuts), pegged to a PER of 13.5x (a 10% discount to 15.2x, ANAN’s long-term mean PER since listing on the SET). Concerns are mounting about operational cashflows and balance sheet risk.
Earnings forecast cuts
We have slashed our core forecasts to a loss of Bt134m for 2021 (ANAN marked a core loss of Bt68m for 1H21) and by 38% for 2022 to a core profit of Bt482m. Our 2021 top-line projection is downsized 20% to Bt4bn (flattish YoY). Residential GM is assumed at 20.9% in 2021 and 21.9% in 2022, far below ANAN’s (pre-COVID-19 era) 10-year mean of 33.7%, due to promotional pricing to clear unsold inventories (Bt20.7bn at end-June 2021, up from Bt19.8bn at YE20). The expected 2022 turnaround to earnings will be driven by the completions of three new condos with a total value of Bt15.6bn (a 39% mean take-up rate). In the interim, we expect core losses for 3Q21 and 4Q21.