FSS International Investment Advisory (FSSIA) has maintained its “BUY” recommendation on WHA Corporation Public Company Limited (SET: WHA) with a target price at THB4.42 per share on solid earnings growth from IE business and outstanding performance from logistics business.
FSSIA stated that the management’s 2022 outlook reaffirms its view that WHA should have a crystal-clear recovery this year. The industrial estate (IE) business should see solid growth in both presales and transfers. Presales jumped to c230 rai in 4Q21 (vs 285 rai of IE land and 340 rai of non-IE land in 9M21) after Thailand’s reopening since Nov-21. Meanwhile, WHA expects the logistics business to deliver outstanding performance in 2022. Overall, FSSIA expected WHA to post solid earnings growth of 20.7%/13.2% in 2022/23.
Targeting land sales of 1,250 rai, above pre-Covid level
FSSIA believed 2022 will be a good year for the IE business, driven by pent-up demand after the travel restriction easing. WHA is targeting IE presales of 1,250 rai (950 rai from Thailand and 300 rai from Vietnam), growing 46% y-y from 855 rai in 2021 and above the estimate of 900 rai. Note that FSSIA’s forecast does not include 100 rai of non-IE presales. The Investment Advisory noted that it sees an upside risk from IE presales in Thailand which could exceed 1,000 rai, as WHA potentially has 1,500 rai which is currently under negotiation. For IE presales in Vietnam, FSSIA expected 300 rai in presales which should mainly be recognised in late 2022 due to the land supply limit. WHA has 300 rai of land available for sale in Nghe An phase 1, while phase 2 with 1,300-1,400 rai should be ready to sell by late 2022.
Logistics unit should continue to deliver impressive performance
WHA’s logistics business should continue to deliver solid performance in 2022. WHA signed long/short-term tenants for 166k sqm/177k sqm respectively (vs 2021 target of 175k/50k sqm). WHA aims to sign 185k/100k sqm to long/short-term tenants in 2022, in line with FSSIA’s estimate. For asset monetisation, WHA plans to divest a total area of 180k sqm to its REITs, comparable to 2021 at 184k sqm but with a lower GPM at 25-30% vs (c40% GPM in 2021).
Near-term catalyst from the potentially highest quarterly earnings
FSSIA maintain BUY with its SoTP-based TP of THB4.4. WHA’s current share price is attractive, trading at 15.3x 2022E P/E, a discount to its 5-year average of 18.2x, despite IE land sales entering a new upcycle. FSSIA saw a near-term catalyst from the solid demand for IE land sales and WHA’s 4Q21 earnings, which FSSIA expected to be the highest in 2021.
