LH’s management suggests that pre-sales in 1Q24 should be in the range of 5.6-5.8 billion baht, up from 4.8 billion baht in 1Q23, mainly from the opening of a new high-end project worth 6.5 billion baht at Nantawan. Bangna KM.15 (10% sold) has been a success.
However, The pre-sales are still lower than the target in 1Q24 at 6 billion baht because there were some booking cancellations of around 400 million baht from the Vive Krungthep Kreetha project. If counting from the total pre-sales in 1Q24, the low-rise project has Pre-sales increased by nearly 5 billion baht, while pre-sales for condominium projects were around 700-800 million baht. The pre-sale base in 4Q23 was high at 8.6 billion baht from the opening of
Condo project Upper level along the Chao Phraya River at the “Wan Time” project, project value 15 billion baht.
Expect profits in 1Q24F to increase slightly YoY.
We expect revenue from house sales to be stable at 4.8 billion baht, hinting that the gross profit margin is likely to be below 30%, while most pre-sales of the Nantawan Bangna KM.15 project still need time to complete. Construction is complete and ready to transfer, so we expect income to come in from 2Q24. However, income from hotel business/rental and service business (1/3 of total revenue) may increase at a low rate YoY due to the strong tourism sector. In addition, we expect the share of profits from investments in associates to grow in the high single digits. Overall, net profit should be at 1.45 billion baht (+7% YoY but -60% QoQ) from a high base that includes profits worth 2 billion baht.
From asset sales in 4Q23 (Figure 1)
Growth momentum improves in 2H24
Although pre-sale/profit in 1Q24F may be 23%/18% from our full year forecast. We still expect growth momentum to improve in 2H24 as LH plans to launch new projects of approximately 11 billion baht in 1H24 and nearly 20 billion baht in 2H24 and has a new marketing plan that will drive project sales. The date and time of the condo will be around the middle of 2024. Such catalyst will help drive the main business from selling houses well. In addition, in 4Q24, LH will sell the Terminal 21 Pattaya department store to the REIT to increase cash flow and profit from. This sale This is because approximately 22% of LH’s homes for sale are priced below 7 million baht/unit, which has the right to reduce ownership transfer fees and real estate mortgage registration fees from the original 2%/1% to 0.01. %, LH may not be the first to benefit from the government’s latest real estate stimulus measures, with most of LH’s homes for sale being priced at a premium for high-end and luxury buyers.
Valuation & Action
from a low base last year We expect profits to bounce back moderately this year from stronger revenue and improved margins. We maintain our 2024F profit estimate at 8 billion baht (+8% YoY) and the original SoTP target price of 8.70 baht (from core business at 3.8 baht, based on a PE of 16.0x from the issue of the possibility of a clear recovery of the housing sales business and investment portfolio at 4.9 baht) (Figure 7). In this regard, LH has announced the DPS payment for 2H23 at 0.30 baht (up XD Date 3 May 2024)
Risks
Weak economic situation Opportunity for stimulating policies from the government Lending has become more stringent amidst a prolonged period of high household debt. Minimum wage increase
Tags: Individual stock analysis KGI Securities #1Q24F forecast Expect presales profits increase YoY
