SIRI’s perpetual bond issues boost its balance sheet, so there’s no liquidity risk. The 2020 profit dive will be followed by just flattish 2021 earnings, but that is already priced in—a YE21 PBV of 0.4x (excluding the perpetual bonds). Until a profit driver is in clear view, our HOLD call stands with a YE21 target price of Bt0.85, pegged to a 2021 PER of 8x (SIRI’s long-term mean).
Squeezed margins for 2020
We assume a residential GM of 24.2% for 2020 (an 18-year low), due to inventory clearance sales (1Q20 residential GM was just 17.9%). Thus, our 2020 core profit estimate is Bt1.6bn, down 25% YoY and the weakest number in a decade. SIRI’s 2020 presales are assumed at Bt26bn (74% low-rise, 26% condo), up 27% YoY, but far below its target of Bt32bn; cancellations were heavy (particularly at the Bt3bn The Line Sathorn condo, after the juristic entity of a neighboring condo sued, seeking to have its EIA revoked). That said, we assume 2020 low-rise presales of Bt19.5bn, up 53% YoY and a new record, even though SIRI launched only Bt13.5bn in low-rise projects last year, down 42% YoY.