Maybank Kim Eng Securities (Thailand) (MBKET) has given a positive outlook on Thailand Property sector, stating that the weak 3Q21 has passed and a healthy 4Q21 is up ahead.
MBKET stated that the sluggish 3Q21 is already in the past and looked forward to a healthy recovery in 4Q21 with more bullish guidance for FY22E and upward adjustments of consensus earnings estimates. In addition to the recent 100% LTV rule, there is also a possibility that the government will extend a reduction in transfer fee and mortgage registration to 0.01% (from 3%) for homes priced below 3 million baht or in the best case below 5 million baht till end-22. MBKET was upbeat on mid to high end developers, LH and AP.
3Q21F combined earnings are likely to dip 20% QoQ
Combined presales for stocks under the coverage dipped 16.5% QoQ, MBKET therefore estimated 3Q21 combined earnings to contract 20% QoQ. Developers with condominium backlog like AP and SPALI should see their earnings decline around 10% QoQ.
Nevertheless, MBKET expected earnings of LH and QH to plunge in the range of 30-40% QoQ from sluggish property sales as well as weak related businesses such as hotels, shopping malls, HMPRO, etc. For PSH, MBKET estimated earnings to slip around 18% QoQ.
9M21 earnings represent 66% of 2021F estimates
Given sluggish 3Q21 performance, 9M21F combined earnings of 15 billion baht (+8% YoY) should account for 66% of its full year estimates. MBKET noted that 9M21 combined earnings of AP and SPALI should be 82% and 68% of 2021F’s. But, those of QH, LH, PSH are meaningfully below the full-year estimates.
Sentiments have improved since Sep-21
MBKET cited that presales for October rebounded to the level achieved prior to the lockdown in 3Q21. The relaxation of LTV to 100% across the board till end-22 announced recently will help to drive the business over the next 12 months. Developers have begun to launch aggressive marketing campaigns as well as new projects, particularly condominiums. Therefore, MBKET believed 4Q21 should be this year’s peak quarter in terms of presales, value of new launches and transfers.
