Earnings Report /
Thailand

LPN Development PCL: Missed our estimate, but beat street; QoQ recovery in 3Q20

  • Missed our expectation, but was far above the consensus

  • LPN reported a net profit of Bt154m for 2Q20

  • The core result was 14% below our estimate

Bualuang Securities
7 August 2020

The stock price should rally on LPN’s street-beating 2Q20 result, which we believe will prove the weakest quarter of the year. Moreover, the firm had Bt1.4bn of cash on-hand at end-June, so the dividend payout ratio could exceed our assumption of 70%. LPN’s stock price now implies a 35% discount to its end-June BV/share value of Bt7.8. We have rolled over our investment horizon to 2021, with a BUY call and a new target price of Bt6 (pegged to a PER of 8x).

Missed our expectation, but was far above the consensus

LPN reported a net profit of Bt154m for 2Q20. Excluding a gain from asset sales, core earnings would be Bt147m, down by 13% YoY and 32% QoQ. The core result was 14% below our estimate (lower revenue than assumed) but beat the street by 32% (a fatter core margin than the consensus assumed). Note that LPN won’t pay a dividend for 1H20.