We suggest selective buys on ResProp stocks, prem-ised on cheap valuations (a coverage 2022 PER of 9.5x, 0.5SD below its 2010-21 mean of 10.5x), recoveries in GM and core earnings in 2023, low new supply, and good dividends. Our top picks are LH and AP.
Low new supply outlook in the face of rising demand
The AREA survey indicates that demand-supply dynamics will improve in 2023, as industry-wide new supply has declined in the face of rising new demand. And although overall industry supply has fallen, the 2022 launch value of our ResProp coverage increased to a nine-year high of Bt285bn, up 155% YoY. In 2023, coverage launch value will increase further YoY, particularly condo starts. Aggregate new low-rise supply will be Bt210-230bn in 2023 (Bt226bn in 2022, flattish YoY). The value of condo units available-for-sale among our coverage totals Bt177bn, down by 4% YoY and by 23% compared to 2019.