20160929-辉立证券-New_project_launches_seen_as_key_to_driving_presales_to_hit_FY16_target_11页_876kb

SC Asset Corporation Summary

Core Content

SC Asset Corporation (SC) is a property development company focused on real estate development activities, including the sale of single-detached houses, townhouses, condominiums, and office buildings for rent. The company has been actively launching new projects to meet its financial targets for FY16.

Main Points

• Presales Performance:
  In 8MFY16, SC's total presales amounted to Bt6.8bn, which is 46% of its full-year target of Bt15bn. Condo presales were particularly weak, only reaching Bt1.5bn, which is far below the Bt6bn target. The average take-up rate for new condo projects was low at 30%, while existing projects like 'The Crest Santora Hua Hin,' 'The Centric Ratchada-Huay Khwang,' and 'The Centric Sea Pattaya' contributed to the sales. The super luxury 'Saladaeng One' had a take-up rate of 42%-43%, which was slow due to its high price tag.

• New Project Launches:
  To meet the full-year condo presales target of Bt6bn, SC plans to launch two new condo projects in the second half of FY16:

  • 28 Chidlom: Bt8bn, located in downtown Bangkok, with an expected take-up rate of 50%, translating to presales of around Bt4bn.
  • Chamber Cher Ratchada-Ramintra: Bt800mn.

• SDH/TH Presales:
  SC's SDH/TH presales were Bt5.3bn in 8MFY16. To meet the full-year target of Bt9bn, it needs an additional Bt3.7bn, or an average of Bt900mn per month. It is expected that the new project launches in 4QFY16 will help increase the average monthly presales and meet the target.

• Profit Forecast:
  SC is expected to achieve a 11% year-on-year profit growth in FY16, supported by revenue expansion and well-managed SG&A expenses. Full-year revenue is forecasted to rise 9% to Bt14.4bn. The company has a backlog of Bt2.9bn to be booked in the remaining months of FY16. Net margin is projected to widen to 14% from 13% in FY15.

• Valuation:
  SC has a current P/E ratio of 6x-7x, significantly below its historical average of 9x P/E. This low valuation is seen as a positive factor, supporting the 'BUY' rating with a target price of Bt4.50/share, representing a 39.81% increase from the closing price of Bt3.36.

Key Financials

Corporate Governance

• The company's corporate governance score is based on a survey conducted by the Thai Institute of Directors Association (IOD).
• The survey results are from a third-party perspective and not based on inside information.
• The company has been classified under different levels of anti-corruption indicators, with some companies rated as Level 5 (Extended), Level 4 (Certified), Level 3 (Established), Level 3A (Declaration to join CAC, etc), Level 3B (Organization's statement but no declaration to join CAC, etc), Level 2 (Declared), and Level 1 (Committed).

Risk Factors

• Economic growth, employment rate, and interest rate.
• Demand and supply equilibrium in the housing market.
• Government investment policy.

Business Description

SC engages in real estate development activities. Its project portfolio includes property development for sale and office buildings for rent.

Financial Performance

• Income Statement:

  • Revenue: Expected to rise 9% to Bt14.4bn in FY16.
  • EBITDA: Expected to rise 13.26% to Bt2,908mn in FY16.
  • EBIT: Expected to rise 12.55% to Bt2,784mn in FY16.
  • Net Profit: Expected to rise 17.59% to Bt2,119mn in FY16.

• Balance Sheet:

  • Total Assets: Expected to rise to Bt34,036mn in FY16.
  • Total Liabilities: Expected to rise to Bt19,444mn in FY16.
  • Shareholder Equities: Expected to rise to Bt14,592mn in FY16.

• Cash Flow:

  • CFO: Expected to be negative in FY16 due to high CAPEX and WC changes.
  • Cashflow from ops: Expected to be negative in FY16.
  • Cashflow from investments: Expected to be negative in FY16.
  • Cashflow from financing: Expected to be positive in FY16.

Peer Comparison (as of 28 September 2016)

Key Financial Summary (as of 31 December 2015)