KGI Securities stated in its report that, in the second quarter of 2024, AP’s presales surged impressively by 49% QoQ and 14% YoY, reaching Bt14.4 billion.
Landed property presales amounted to Bt8.4 billion, a 24% increase QoQ, yet a 2% drop YoY, while condominium presales saw a significant rise to Bt6 billion, a 108% surge QoQ, and a 50% increase YoY. The remarkable spike in presales was mainly fueled by the launch of new projects worth Bt25.5 billion.
KGI highlighted that roughly 55% of the 2Q24 presales stemmed from the sales of new projects, notably three condominium projects, including Bt2.5 billion Life Charoennakorn-Sathorn (40% sold), Bt4.8 billion Aspire Huaykwang (62% sold), and Bt500 million Arun Prive (30% sold).
For the first half of 2024, presales totaled Bt24 billion, marking a 2% increase YoY and representing 47% of the full-year guidance. Among developers within KGI’s coverage, AP maintained its leading position and demonstrated the strongest year-to-date performance in terms of presales.
Despite a challenging operational environment, AP managed to capture demand from the mid-to-high-end segment, which exhibited more resilience compared to other market segments, attracting interest from both domestic and international buyers. While landed property presales experienced a 10% decline YoY to Bt15 billion, condominium presales surged by 30% to nearly Bt9 billion, with foreign buyers contributing 40% or Bt3.6 billion.
The analyst anticipates a positive earnings trajectory for AP in the upcoming quarters, with an expected rebound in 2Q24F earnings from the lower base in 1Q24. This anticipated recovery is attributed to revenue realization from a substantial backlog of landed properties valued at Bt13 billion, as well as the completion of two condominium projects – Bt1.5 billion Aspire Ratchayothin (97% sold) and Bt3.5 billion Life Phahon Ladprao (60% sold).
In 3Q24F, key drivers for presales/revenue are foreseen to stem from new launches worth Bt17 billion and a newly completed condominium, Bt6.5 billion Life Rama 4-Asoke (50% sold).
Despite a subdued macroeconomic outlook, AP’s stock price has declined to Bt8.25, presenting a potential upside of 35% compared to KGI’s 2024 target price of Bt11.10, based on a 2024F PE ratio of 6x (long-term mean).
KGI Securities upgraded AP’s rating from ‘Neutral’ to ‘Outperform’, underscoring AP’s current valuation at around 4.5x PE, below the -1 SD level, with an appealing dividend yield of close to 8%.
Risk factors to consider include economic conditions, potential government stimuli, stringent lending policies amid prolonged high household debts, and potential minimum wage increases.
