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NOBLE DEVELOPMENT PCL
NOBLE <Bt8.20>

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Earnings hit the target

NOBLE reported 2002 earnings of Bt265mn, right in line with our forecast. Fourth quarter results were strong, with sales jumping 26.6% qoq to Bt386mn and net profit climbing 16% to Bt85mn. Operating margins narrowed, however to 20.8% compared with 24.7% in 3Q02.

Despite its robust results, we have revised down our earnings forecast for this year by 11% to Bt570mn. This is due to NOBLE's decision to scrap two townhouse projects in favour of developing a Bt1.26bn condominium in Bangkok's Thonglor district. which takes more time for development. The condo project requires longer-term funding than townhouses and will also result in slower sales recognition.

Since hitting a peak of Bt9.60 three months ago, shares of NOBLE have fallen nearly 15%. The stock is currently trading at a PER and EV/EBITDA of under 7x and is 57% below our NPV of Bt12.9/share.

Table 1: NOBLE's earnings forecasts
Year to Dec	2001	2002	2003E	2004E	2005E
Sales (Btmn)	141	1,049	2,513	2,555	2,678
Net profits (Btmn)	-131	265	570	563	420
EPS (Bt)	-0.44	0.72	1.25	1.23	0.92
Growth (%)	-665%	266%	72%	-1%	-25%
Cash per share (Bt)	1.3	0.9	0.8	0.8	0.9
PER (X)	-	11.3	6.6	6.7	8.9
BPS (Bt)	1.1	3.6	4.7	5.4	6.1
EV/EBITDA (x)	-41.8	19	6.9	5.9	5.4
Dividend Yield (%)	0%	2%	4%	4%	3%

Sharp turnaround in 2002

NOBLE reported 2002 earnings of Bt265mn, right in line with our forecast. Fourth quarter results were strong, with sales jumping 26.6% qoq to Bt386mn and net profit climbing 16% to Bt85mn. Operating margins narrowed, however to 20.8% compared with 24.7% in 3Q02. Major revenue contributions came from the Noble Tara, Noble Wana and Noble Wacharapol developments, which are worth a combined Bt2.32bn. The company has Bt916mn of pre-sales on hand, representing 36% of our Bt2.5bn sales forecast for 2003.

Table 2: Quarterly income statement
	4Q02	4Q01	% Chg	3Q02	% Chg	2002	2001	% Chg
Sales	386	58	569.0%	305	26.6%	1,049	141	641.9%
COGs	265	74	257.6%	190	39.5%	692	155	345.3%
Gross profits	121	-16	n.m.	115	5.4%	357	-14	n.m.
SG& A	41	48	-13.6%	40	3.2%	155	108	44.3%
Operating profits	80	-64	n.m.	75	6.6%	202	-122	n.m.
Interest expenses	9	4	151.1%	9	1.8%	39	19	102.6%
Non-operating income	14	12	17.2%	8	81.1%	56	26	115.2%
Pre-tax income	85	-55	n.m.	74	15.2%	218	-115	n.m.
Net profits	85	-61	n.m	74	15.7%	265	-131	n.m.
EPS	0.2	-0.2	n.m.	0.2	15.7%	0.6	-1.4	n.m.

Gross margins (%)	31.4	-28.3		37.7		34.1	-9.9
Operating margins (%)	20.8	-110.7		24.7		19.3	-85.9

More emphasis on pre-built housing

The company aims to raise its portion of pre-built housing from less than 15% last year to about 70% in 2003-2005. After receiving Bt1.1bn in proceeds from the conversion of NOBLE-W1 last August, NOBLE plans to launch four housing projects worth a combined Bt3.7bn over the next 12 months. The company has scrapped plans for two townhouse projects in favour of developing a Bt1.26bn condominium project in the popular Thonglor area of Bangkok. Construction should take roughly two years from 3Q03, with estimated costs of about Bt700mn.

Table 3: NOBLE�s housing and rental projects� details
	Value	Units	Average	Sales	%
	(Btmn)		Price	Progress	Sold
Selling projects
Noble Tara (Ekami-Pharam IV)	688	85	8.09	646	93.90%
Noble Wana (Pinklao)	626	130	4.82	483	77.10%
Noble Wana (Watcharapol)	915	158	5.79	351	38.40%
Developing projects
Noble Ana Wana (Pinklao)	756	98	7.71	-	0.00%
Noble Tara (Ngamwongwan)	836	101	8.27	-	0.00%
Nobe Pawan	1,607	352	4.57	-	0.00%
Noble Ramindra	485	492	0.99	-	0.00%
Noble House Condo- Thonglor	1,260	238	5.29	-	0.00%
Total	7,173

Rental properties			Areas (sqm)		Rent/sqm
Noble Nakra- Thonglor (Commercial)	342	24	3,698		500

Gearing ratio falls to 0.5x in 4Q02

NOBLE's total borrowings stood at Bt831mn at end-2002, with its gearing ratio falling to 0.5x versus 0.64x in 3Q02. We expect borrowings to average Bt1bn in 2003 and fall to Bt900mn next year.

Table 4: Financial ratios
	Q4/01	Q1/02	Q2/02	Q3/02	Q4/02
Gearing	2.97	2.92	2.47	0.64	0.49
Interest Cover	-17.1	0.2	3.9	8.2	8.6
Inventory Days	2,069	1,853	1,167	1,266	914
Collection Days	39	10	62	72	38
Payment Days	58	60	76	63	39
Net debt (Btmn)	980	948	1,006	290	274
Working capital (Btmn)	871	978	1,124	1,795	1,768

2003 earnings forecast revised down by 11%

We have revised down our earnings forecast by 11% this year to Bt570mn and 9% in 2004 to Bt563mn. This is because of slower sales recognition on the Thonglor condominium project versus relatively fast turnover on townhouse sales. We have also trimmed our sales forecasts due to an expected slowdown in housing demand and stiffer competition in the property market.

Table 5: Profit forecast revision

Original

Revision

% Change

2002

2003F

2004F

2002

2003F

2004F

2002

2003F

2004F

Revenues (Btmn)

1,211

2,655

2,824

1,049

2,513

2,555

-13%

-5%

-10%

Gross margins

34%

34%

30%

34%

34%

35%

Operating margins

18%

22%

20%

19%

22%

23%

Interest expenses (Btmn)

46

39

42

39

41

67

-6

2

25

Working capital (Btmn)

1,643

1,508

1,653

1,750

2,057

2,040

107

549

387

Borrowing (Btmn)

1,017

726

467

827

1,016

900

-190

291

434

Net profits (Btmn)

267

641

617

265

570

563

-1%

-11%

-9%

Income statement

(Btmn)

2001

2002

2003F

2004F

2005F

Sales

141

1,049

2,513

2,555

2,678

COGs

155

692

1,648

1,658

1,804

Gross margins

-14

357

865

898

874

SG&A

108

155

302

307

295

Operating margins

-122

202

564

591

580

Interest expenses

19

39

41

67

57

Other income

26

56

48

39

56

Pretax profits

-115

218

570

563

579

Income taxes

-

-

-

-

159

Associate Earnings

-30

-

-

-

-

Minority Interests

0

-

-

-

-

Extraordinary Items

13

47

-

-

-

Net income

-132

265

570

563

420

Balance sheet

(Btmn)

2001

2002

2003F

2004F

2005F

Cash equivalent

43

557

769

1,081

1,269

Receivable

15

109

151

105

81

Inventories

1,229

1,733

2,032

2,003

1,972

Investment

-

-

-

-

-

Fixed Assets

112

166

163

161

158

Total assets

1,505

2,768

3,471

3,718

3,858

Credits

25

92

126

68

99

ST-debts

325

247

412

365

295

LT-debts

698

584

605

536

433

Other liability

128

155

155

157

161

Equities

344

1,704

2,205

2,626

2,905

Cash flow statement

(Btmn)

2001

2002

2003F

2004F

2005F

Net Profit

-131

265

570

563

420

Depre./Amort.

9

9

12

13

13

Net Working Cap.

-889

-531

-307

17

86

Unrealized F/X

13

-24

-

-

-

Cash flow from operations

-574

-407

64

589

506

CAPEX

-7

-64

-10

-10

-10

Investment

-

-

-

-

-

Cash flow from investing

-319

-24

14

-10

-10

Debt Movement

662

-192

185

-116

-172

Capital Call

274

-755

2

-

-

Dividend Paid

-

-70

-70

-142

-141

Cash flow from financing

910

921

117

-258

-313

Free cash flow

-581

-471

54

579

496

Financial ratios

2001

2002

2003F

2004F

2005F

Gross margins

-9.9%

34.1%

34.4%

35.1%

32.7%

Operating margins

-85.9%

19.3%

22.4%

23.1%

21.7%

Net gearing

2.85

0.16

0.11

-0.07

-0.19

Interest coverage

-4.2

7.2

14.7

9.4

11.2

Inventory Days

2,887

914

450

441

399

Collection Days

39

38

22

15

11

Payment Days

58

48

28

15

20

Analyst: Pongpan(Ext. 1450)
Email: pongpan@kimeng.co.th

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