WHA – Raises 2024F land sales target

WHA has raised its 2024F target land sales to 2,500 rai with a YTD average selling price increase of 18% and we like its backlog though 2025 with earnings growth of 12.7% in 2024F and 16.2% in 2025F. With FDI continuing to grow and backed by BoI promotional support in 2024, we believe WHA is positioned to benefit most among peers. We maintain Outperform with a 2025 TP of Bt6.60/sh based on average 7-year PE of 17x, reflecting its earnings cycle.

Raised 2024F land sales target. After signing for a big-lot sale of 400 rai to a technology company in August, we believe WHA will sell 1,500-1,600 rai in 9M24 counting ongoing negotiations and Letters of Intent (LOI) for ~600 rai. This has led WHA to raise its 2024F land sales target to 2,500 rai (-10%): 2,300 rai in Thailand, and 200 rai in Vietnam, up from the earlier target of 2,400 rai (2,200 rai in Thailand and 200 rai in Vietnam) and from 2,275 in early 2024. Although total land sales will be down YoY, average selling price has risen 17-18% YTD, leading to expectations of a higher gross margin.

Earnings growing in 2024F-2025F. After the sale of 1,042 rai in 1H24, sale of another 1,450 rai is expected in 2H24, giving it stronger backlog which we expect to be booked as revenue in 2025. Thus, we maintain our 2024 revenue forecast of Bt12.8bn (-13.4%), with a wider average gross margin of 53.1% from 46.4% in 2023. Contribution from equity investment is expected to grow 12% to Bt1.67bn, backed by higher contribution from the JV project (IER). We thus expect a strong net profit in 2024F of Bt4.99bn (+12.7%). In December it will sell Bt1.06bn in assets to WHAIR.

Risks and concerns. We believe Thailand will benefit from geopolitical risk and investment relocation over the next few years. After growth in the automotive, electronics and appliances and consumer sectors, we expect the country’s outstanding skilled labor and efficient utilities to bring expansion in data centers and other higher value sectors. We are monitoring FDI and policy changes in important trading countries. For the utilities business, we also monitor regulatory risk and cost of raw materials.

ESG... aiming for net zero in 2050. With strength in the environmental (E) category, especially in energy and water management, and the use of sustainable products, WHA has committed to net zero greenhouse gas emissions by 2050. For ESG risk, WHA may lag in terms of labor and employment practices (S) and board and executive compensation (G).