Equity Analysis /

Thailand: Residential Property - Looking to 2Q22 and beyond

  • Quarterly earnings heading into an uptrend

  • Launch value to more than double QoQ in 2Q22, so heavier presales

  • 1H22 launches secure, but uncertainty over planned 2H22 starts

Bualuang Securities
27 May 2022

Our NEUTRAL call stands on the Residential Property sector, as our ResProp coverage already trades at a mean 2022 PER of 10.6x (equal to its long-term mean). Earnings will improve through this year and some stocks will pay good dividends, but we have concerns over 2Q22 and 2H22—will low-rise demand and launch plans hold up? We recommend accumulating LH in anticipation of 2Q22 bottom-line growth and suggest letting profits run on AP.

Quarterly earnings heading into an uptrend

1Q22 will prove to be the weakest ResProp quarter of the year, we believe. Coverage earnings will recover in 2Q22 and strengthen in 3Q22 and in 4Q22. Our forecast is in line with the historical pattern—ResProp sales tend to be concentrated in 2H22. Our models point to YoY coverage core profit growth of 5-10% for 2Q22, followed by strong YoY and QoQ growth in 3Q22. The value of scheduled condo comple-tions is Bt10bn in 2Q22, Bt35bn in 3Q22, and Bt35bn in 4Q22. After 2Q22 results in mid-Aug, most ResProp stocks will pay interim dividends.