LALIN staged a remarkable
turnaround last year with earnings surging to Bt390mn, 8%
above our earlier estimates. As a result, we have revised up
our 2003 earnings forecast by 20% to Bt572mn and our 2004
forecast by 26% to Bt593mn.
Despite our earnings upgrade,
we believe LALIN offers less upside potential than other
property stocks. Property shares have fallen 14% since the
Thai market's property sub-index hit its 2003 peak on
January 21 while LALIN's shares have traded in a narrow
range of Bt32-34. Based on our revised NAV estimate of Bt39,
LALIN has a theoretical upside of 15%, considerably lower
than our favourite property stocks such as LH, NOBLE and
LPN. Accordingly, we rate the stock a HOLD.
|
|
PER
(x) |
|
EV/EBITDA
(X) |
ROCE |
2002 |
NPV |
Rec |
|
|
2003F |
2004F |
2003F |
2004F |
(2002-3) |
DE(%) |
(Bt/shr) |
|
|
GOLD |
8.6 |
6.9 |
11.2 |
6.0 |
10.1% |
0.56 |
14.9 |
BUY |
|
LALIN |
9.8 |
9.5 |
6.5 |
5.9 |
35.6% |
0.26 |
39.0 |
HOLD |
|
LH |
9.8 |
11.1 |
9.8 |
10.3 |
24.8% |
0.35 |
9.9 |
BUY |
|
LPN |
8.5 |
7.6 |
9.7 |
6.2 |
22.3% |
0.37 |
36.1 |
BUY |
|
NOBLE |
5.8 |
5.8 |
6.1 |
5.1 |
26.1% |
0.46 |
12.9 |
BUY |
|
PERFEC |
7.9 |
7.3 |
13.5 |
11.9 |
9.9% |
1.11 |
13.8 |
BUY |
|
QH |
13.6 |
13.0 |
10.5 |
7.9 |
10.6% |
1.47 |
10.5 |
BUY |
|
SIRI |
|
|
|
Under review |
|
|
|
|
SUPALI |
11.8 |
11.4 |
14.2 |
12.7 |
6.2% |
1.73 |
2.49 |
SELL |
Note: PER and EV/EBITDA are calculated including all
warrants
Table 1:
LALIN's earnings forecasts
|
Year to Dec |
2001 |
2002F |
2003F |
2004F |
2005F |
|
Sales (Btmn) |
1,414 |
1,922 |
2,758 |
2,935 |
2,806 |
|
Net profits (Btmn) |
35 |
390 |
572 |
593 |
540 |
|
EPS (Bt) |
0.27 |
2.93 |
3.47 |
3.59 |
3.27 |
|
Growth (%) |
(4%) |
981% |
18% |
4% |
(9%) |
|
Cash per share (Bt) |
3.7 |
3.4 |
3.1 |
3.1 |
2.9 |
|
PER (X) |
125.4 |
11.6 |
9.8 |
9.5 |
10.4 |
|
BPS (Bt) |
6.3 |
13.6 |
14.0 |
16.0 |
18.2 |
|
EV/EBITDA (x) |
51.9 |
10.3 |
6.5 |
5.9 |
6.0 |
|
Dividend Yield (%) |
0% |
2% |
3% |
3% |
4% |
Strong
operations to continue this year
LALIN staged a remarkable
turnaround last year with earnings increasing to Bt390mn, 8%
above our earlier estimates due to a huge jump in 4Q02
profitability to Bt175mn. LALIN is effectively capitalising
on the rebound in property demand, rising house prices and
low acquisition costs. Sales rose 36% yoy while operating
margins widened to 26.8% from 6.5% in 2001. After raising
new capital in its 4Q02 IPO, LALIN has turned to a net cash
position. Recent success in new housing sales indicates
continuing strong growth in 2003. We are currently
forecasting 18% EPS growth in 2003 to Bt3.5/share.
Table 2:
Quarterly income statement
|
|
4Q02 |
3Q02 |
%
Chg |
2002 |
2001 |
%
Chg |
|
Sales |
643 |
567 |
13.5% |
1,922 |
1,414 |
36.0% |
|
COGs |
405 |
378 |
7.0% |
1,273 |
1,217 |
4.6% |
|
Gross
profits |
238 |
188 |
26.5% |
649 |
196 |
230.8% |
|
SG& A |
34 |
34 |
0.0% |
134 |
104 |
28.4% |
|
Operating profits |
204 |
154 |
32.4% |
515 |
92 |
460.6% |
|
Interest expenses |
6 |
0 |
n/a |
14 |
27 |
(47.1%) |
|
Non-operating income |
2 |
0 |
n/a |
7 |
5 |
41.4% |
|
Pre-tax income |
200 |
154 |
30.1% |
508 |
70 |
627.8% |
|
Net
profits |
175 |
107 |
63.1% |
390 |
35 |
1006.0% |
|
EPS |
1.1 |
0.8 |
28.5% |
2.9 |
0.3 |
981.2% |
|
Gross
margins (%) |
37.0 |
33.2 |
|
33.8 |
13.9 |
|
|
Operating
margins (%) |
31.7 |
27.1 |
|
26.8 |
6.5 |
|
Existing
projects targeting mid-income buyers
As of last month, LALIN had a
housing backlog of Bt5.43bn and presales of Bt900mn, or 33% of
our 2003 revenue forecast. The backlog includes 13 projects
including 10 existing and three new properties. About 57% of
the backlog will be semi-built and 20% pre-built, which allows
the company to recognise sales within 2-3 months. Management
said construction of a new house normally takes 7-8 months.
LALIN realises all of its income on a cash basis.
Table 3:
Details of LALIN projects
|
Existing
projects |
Value |
Units |
Price |
%
left |
Value |
%
of total |
|
|
(Btmn) |
|
(Btmn) |
Jan-03 |
left |
|
|
Lalin Greenville-Ram
Indra |
650 |
210 |
3.1 |
18% |
117 |
|
|
Lalin
Greenville-Ekachai- Wongwan |
500 |
114 |
4.4 |
16% |
80 |
|
|
Lalin Greenville- Rama
IV |
1,800 |
434 |
4.1 |
100% |
1,800 |
|
|
|
2,950 |
|
|
|
1,997 |
36.8% |
|
|
|
|
|
|
|
|
|
Baan Burirom - Koobon |
1,159 |
610 |
1.9 |
33% |
382 |
|
|
Baan Burirom- Rangsit |
1,000 |
491 |
2.0 |
73% |
730 |
|
|
Baan Lalin-Ram Indra |
600 |
220 |
2.7 |
10% |
60 |
|
|
Baan Lalin Srinakarin |
600 |
223 |
2.7 |
27% |
162 |
|
|
Baan Lalisa-Srinakarin |
320 |
375 |
0.9 |
50% |
160 |
|
|
Baan Lalin-Ram Indra |
1,100 |
370 |
3.0 |
100% |
1,100 |
|
|
Baan Lalin-Teparak II |
400 |
140 |
2.9 |
100% |
400 |
|
|
|
5,179 |
|
|
|
2,994 |
55.2% |
|
|
|
|
|
|
|
|
|
Lilly Ville-
Phaholyothin |
500 |
400 |
1.3 |
30% |
150 |
|
|
Lilly Ville- Srinakarin |
1,500 |
1,106 |
1.4 |
10% |
150 |
|
|
Lilly Ville-
Thonburirom |
680 |
430 |
1.6 |
20% |
136 |
|
|
|
2,680 |
|
|
|
436 |
8.0% |
|
|
|
|
|
|
5,427 |
|
LALIN concentrates on
mid-income buyers. About 90% of the company's units sold are
priced around Bt2-4mn, while the remaining 10% would be
priced under Bt2mn/unit. Following the launch of three new
projects worth Bt3.3bn in 1Q03, LALIN is looking to
introduce 3-4 projects with a target value of Bt3-4bn later
this year. The company recently spent Bt198mn on land
purchase. LALIN is in a position to expand due to its low
gearing, internal cash flow and strong capital base after
last year's IPO.
Earnings
forecast revised up 20% in 2003 and 26% in 2004
We have revised up our 2003
earnings forecast by 20% to Bt572mn and our 2004 forecast by
26% to Bt593mn. We have raised our revenue forecasts for the
two years up 12 and 8%, respectively, and increased our
operating margin estimates to 29% and 28%. This is due to
higher product pricing, low costs and controlled overheads. We
are also raising LALIN's working capital estimate to a Bt2.2bn
average in 2003-2004, but total borrowing is expected to go up
only slightly given strong internal cash flow.
Table 4:
Earnings revision
|
|
|
Original |
|
|
Revision |
|
%
Change |
|
|
2002 |
2003F |
2004F |
2002 |
2003F |
2004F |
2002 |
2003F |
2004F |
|
Revenues (Btmn) |
1,964 |
2,471 |
2,712 |
1,922 |
2,758 |
2,935 |
(2%) |
12% |
8% |
|
Gross margins |
34% |
34% |
32% |
34% |
35% |
35% |
|
|
|
|
Operating margins |
27% |
27% |
24% |
27% |
29% |
28% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses
(Btmn) |
22 |
21 |
23 |
14 |
16 |
22 |
|
|
|
|
Working capital
(Btmn) |
1,602 |
1,422 |
1,402 |
1,767 |
2,109 |
2,220 |
|
|
|
|
Borrowing (Btmn) |
677 |
387 |
379 |
179 |
624 |
122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
profits (Btmn) |
362 |
477 |
470 |
390 |
572 |
593 |
8% |
20% |
26% |
|
Income
statement |
|
(Btmn) |
2001 |
2002 |
2003F |
2004F |
2005F |
|
Sales |
1,414 |
1,922 |
2,758 |
2,935 |
2,806 |
|
COGs |
1,217 |
1,273 |
1,793 |
1,922 |
1,882 |
|
Gross
margins |
196 |
649 |
965 |
1,014 |
924 |
|
SG&A |
104 |
134 |
171 |
191 |
196 |
|
Operating
margins |
92 |
515 |
794 |
823 |
728 |
|
Interest expenses |
27 |
14 |
16 |
22 |
9 |
|
Other income |
5 |
7 |
10 |
18 |
26 |
|
Pretax profits |
70 |
508 |
789 |
818 |
745 |
|
Income taxes |
35 |
118 |
217 |
225 |
205 |
|
Associate Earnings |
- |
- |
- |
- |
- |
|
Minority Interests |
- |
- |
- |
- |
- |
|
Extraordinary Items |
- |
- |
- |
- |
- |
|
Net
income |
35 |
390 |
572 |
593 |
540 |
|
Balance
sheets |
|
(Btmn) |
2001 |
2002 |
2003F |
2004F |
2005F |
|
Cash equivalent |
20 |
302 |
891 |
730 |
1,265 |
|
Receivable |
15 |
11 |
22 |
24 |
31 |
|
Inventories |
775 |
1,968 |
2,127 |
2,238 |
2,119 |
|
Investment |
5 |
- |
- |
- |
- |
|
Fixed Assets |
194 |
130 |
117 |
103 |
94 |
|
Total assets |
1,305 |
2,421 |
3,168 |
3,107 |
3,521 |
|
Credits |
24 |
213 |
39 |
42 |
41 |
|
ST-debts |
166 |
14 |
253 |
49 |
74 |
|
LT-debts |
271 |
164 |
371 |
73 |
109 |
|
Other liability |
34 |
116 |
118 |
134 |
125 |
|
Equities |
813 |
1,918 |
2,396 |
2,818 |
3,180 |
|
Cash
flow statement |
|
(Btmn) |
2001 |
2002E |
2003E |
2004E |
2005E |
|
Net Profit |
35 |
390 |
572 |
593 |
540 |
|
Depre./Amort. |
24 |
16 |
23 |
24 |
24 |
|
Net Working Cap. |
257 |
(1,001) |
(343) |
(110) |
111 |
|
Unrealized F/X |
- |
- |
- |
- |
- |
|
Cash flow from operations |
334 |
(121) |
245 |
522 |
667 |
|
|
|
|
|
|
|
|
CAPEX |
(66) |
49 |
(10) |
(10) |
(15) |
|
Investment |
- |
- |
- |
- |
- |
|
Cash flow from investing |
(11) |
(408) |
287 |
(10) |
(15) |
|
|
|
|
|
|
|
|
Debt Movement |
(303) |
(259) |
445 |
(502) |
61 |
|
Capital Call |
- |
769 |
- |
- |
- |
|
Dividend Paid |
- |
(116) |
(93) |
(172) |
(178) |
|
Cash flow from financing |
(306) |
516 |
352 |
(673) |
(117) |
|
|
|
|
|
|
|
|
Free cash flow |
268 |
(72) |
235 |
512 |
652 |
|
Financial
ratios |
|
|
2001 |
2002E |
2003E |
2004E |
2005E |
|
Gross margins |
13.9% |
33.8% |
35.0% |
34.5% |
32.9% |
|
Operating margins |
6.5% |
26.8% |
28.8% |
28.0% |
25.9% |
|
Net gearing |
0.51 |
(0.06) |
(0.11) |
(0.22) |
(0.34) |
|
Interest coverage |
3.6 |
36.3 |
50.2 |
37.6 |
82.5 |
|
Inventory Days |
232 |
564 |
433 |
425 |
411 |
|
Collection Days |
4 |
2 |
3 |
3 |
4 |
|
Payment Days |
7 |
61 |
8 |
8 |
8 |
|
