Ayudhya Best Stock Trading Company recommends Trading PRIN

2009-05-25T00:34:00.000-07:00

Prinsiri - TRADING

Ticker PRIN
Stock Rating TRADING
Previous Rating TRADING
Fair Value Bt1.30
Current Price Bt1.05
Upside/(Downside) 23.8%

Consensus (median) Bt0.93
Diff from Consensus 39.8%
Sector Property Development (Residential)
Sector Rating NEUTRAL

On the verge of better liquidity
Cash inflows from the sale and transfer of projects in 2Q09 will lead to an improvement in liquidity and the net D/E ratio falling. We are raising our fair value to Bt1.30 to reflect a lower gearing and transfers of condo projects.

High leverage to reduce this year.
PRIN experienced an increase in leveraging stemming from its simultaneous launch of three condo projects (The Complete Ratchaprarob, The Pulse Paholyothin 37 and The Complete Narathiwatrachanakarin) back in early 2007. Unfortunately, as these did not pass EIA approval, construction permits were not issued, and thus PRIN was unable to deliver units to customers in 2008. The result was that its net D/E ratio rose from 1.2x in 2007 to 1.4x in 2008. We foresee liquidity improving as i) the management believes units of two condo projects, The Complete Ratchaprarob and The Pulse Paholyothin 37, and units of a resort condo project, The Pride Pattaya sai 2, will be transferred to customers starting in 2Q09, which will provide cash inflow of Bt2.1bn; and ii) PRIN has sold land located in the Pinklao and Ratburana areas to LPN in April. As a result, the net D/E ratio should come down to around 0.84x this year.

Condo projects to boost 2009 revenue.
PRIN’s liquidity situation should improve in 2Q09 due to cash obtained from the transfer of condo units and the sale of land. Our revenue projection for 2009 therefore calls for a rise of 25.3% YoY. The gross margin looks likely to narrow, however, to 21.4% vs 23% in 2007 and 24% in 2008 owing to cost overruns from the delay in delivering the mentioned condo projects. This is the factor behind our estimated small full-year net profit growth of 4% YoY.

Recommendation and valuation.
Sufficient liquidity is the key to enable PRIN to continue growing earnings and launching future projects. Due to its tough financial situation, P/E and P/BV are trading at discounts to the average of its peers. Sooner or later, though, cash inflows from the sale and transfer of projects will lead to an improvement in liquidity, which will be a major share price catalyst. On this, we maintain our “Trading” call, while we raise our fair value from Bt1.10 to Bt1.30 to reflect a lower gearing assumption and transfers of condo projects. Our fair value is based on a prospective 4x P/E, which is a discount to the average 7.25x of its peers.

By Ayudhya Securities Public Company Limited on May 22, 2009

Top USA Cities

Tucson Arizona,Glendale Arizona,Austin Texas,Tampa Florida,Arlington Texas ,North Hempstead New York,Dallas Texas ,Fresno California,Colorado Springs Colorado ,Stockton California,New York New york,Philadelphia Pennsylvania ,Garland Texas,Anaheim California,Laredo Texas,Raleigh North Carolina ,San Antonio Texas,St. Louis Missouri ,Birmingham Alabama,Greensboro North Carolina ,Durham North Carolina ,Hialeah Florida,Memphis Tennessee,Sacramento California,Modesto California,Baton Rouge Louisiana ,Cleveland Ohio,Norfolk Virginia,St. Petersburg Florida ,Washington District of Columbia,San Diego ,Detroit Michigan,Hempstead New York ,Boston Massachusetts,Lexington-Fayette Kentucky,Atlanta Georgia,Chandler Arizona,Las Vegas Nevada ,Nashville-Davidson Tennessee,Scottsdale Arizona,Pittsburgh Pennsylvania,Bakersfield California,Corpus Christi Texas ,Akron Ohio,New Orleans Louisiana ,Orlando Florida,Lincoln Nebraska,Long Beach California ,Baltimore Maryland,Milwaukee Wisconsin,Oakland California,San Jose California ,Chicago Illinois ,Phoenix Arizona ,Los Angeles California,Jacksonville Florida,Reno Nevada,Oklahoma City Oklahoma ,Anchorage Alaska,Houston Texas ,Minneapolis Minnesota,Honolulu Hawaii,Buffalo New York ,Chula Vista California ,Toledo Ohio,Albuquerque New Mexico ,Jersey City New Jersey,Madison Wisconsin,El Paso Texas ,Virginia Beach Virginia ,San Francisco California ,Portland Oregon ,Babylon New York ,St. Paul Minnesota ,Charlotte North Carolina ,Kansas City Missouri ,Oyster Bay New York,Mesa Arizona,Tulsa Oklahoma,Plano Texas,Omaha Nebraska,Fort Worth Texas ,Columbus Ohio,Riverside California,Fort Wayne Indiana ,Indianapolis Indiana,Islip New York ,Henderson Nevada,Wichita Kansas ,Lubbock Texas,Santa Ana California ,Chesapeake Virginia,Denver Colorado,Cincinnati Ohio,Seattle Washington,Brookhaven New York ,Miami Florida,Rochester New York ,Aurora Colorado,Newark New Jersey

best stock trading company online

Ayudhya Best Stock Trading Company recommends Trading PRIN