AP reported 3Q24 net profit of Bt1.45bn (-14.5% YoY but +14.3% QoQ), in line with estimates, showing a lower gross margin and higher interest expense but solid JV contribution. With rejections and cancellations still high, we look for recovery YoY in 4Q24F but expect it to be flat QoQ and thus downgrade our 2024F net profit by 4% to Bt5.1bn (-14.8%). With solid backlog in 2025F, we expect net profit to grow 13.7%. We maintain our tactical call of Outperform with 2025 TP of Bt12.90/sh.
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AP - 3Q24: Net profit down YoY but up QoQ
3Q24 net profit dropped 14.5%YoY but grew 14.3% QoQ. AP reported 3Q24 net profit of Bt1.45bn (-14.5% YoY but +14.3% QoQ), in line with estimates, with a lower gross margin and higher interest expense but solid JV gain. Revenue was Bt9.9bn (-1.2% but +1.6% QoQ), 90% from low-rise and 10% from condos. Average gross margin was 33.2% (from 35.5% in 3Q23 and 34.9% in 2Q24) from a greater proportion of low-rise transfers carrying a lower gross margin. Interest expense shot up 330.8% YoY and 21.2% QoQ to Bt210mn on higher interest paid for ongoing projects. JV contribution grew 7.5% YoY and 121% QoQ to Bt341mn from new transfers at the JV condo Life Rama 4-Asoke (project value Bt6.5bn, take-up rate 62%, with transfers at Bt1.75bn). This brought 9M24 net profit to Bt3.72bn (-21%).
2024 presales may miss target. AP is planning to launch 11 projects with total value of Bt17.6bn in 4Q24 to reach is full year goal of Bt58bn. As of 10M24, presales were Bt40.3bn (+3.8% YoY). Since no new projects were launched in October, we expect presales to jump in Nov-Dec in tandem with new project launches. At the same time, we believe it is unlikely to make its 2024 presales target and expect presales to be close to 2023’s at Bt51-52bn, missing target by ~10%.
Downgrade 2024F by 4%, maintain 2025F. As of October 31, AP has backlog of Bt39.9bn, with 33% to be recognized in 4Q24 and the rest in 2025-2027. By product, backlog is 40% low-rise, 49% JV and 11% condo. As rejections and cancellations continue high, we expect 4Q24F net profit to be flat QoQ but grow YoY. With this in mind, we downgraded our 2024F revenue by 4% to Bt37.6bn (-1%), adjusting net profit down 4% to Bt5.16bn (-14.8%), pressured by high interest. Given the solid ~Bt1.5bn in backlog scheduled to be booked in 2025F, we expect revenue to grow 13.8% to Bt42.9bn in 2025 with a net profit of Bt5.86bn (+13.7%).
ESG key risks. Competition is getting intense and inventory management is vital. ESG key risks: AP obtains EIAs for both low-rise and condos, which helps lower environmental risks (E). The chairman of the board is an independent director (G), as of 2023.