WHA – Preview 3Q24: Net to rise YoY, drop QoQ

We estimate 3Q24 net profit at Bt727mn (+16.8% YoY but -43.6% QoQ), then rise to the year’s high in 4Q24, backed by backlog recognition. Land sales and backlog recognition will underwrite strong growth of 12.7% in 2024F and 16.2% in 2025. With FDI growth continuing and high growth in BoI applications in 2024 and into 2025 plus expansion in new economy ventures such as data centers, WHA is positioned to be one of the top IE beneficiaries. We maintain Outperform with a 2025 TP of Bt6.60 based on 7-year average PE of 17x, reflecting its earnings cycle.

9M24 land sales at 68% of 2024 target. We estimate total land sales in 3Q24F at 730 rai (-26% YoY but +115% QoQ) with the largest piece of 400 rai sold to a technology company for its first data center in Thailand. This brings land sales in 9M24F to 68% of WHA’s 2024 target of 2,500 rai (-10% YoY). However, given the current letters of intent (LoI) on hand for ~900 rai, we believe it is on track to achieve its goal. The high demand has pushed selling prices in Thailand up YTD by over 10% YoY. Although land sales in Vietnam may fall short of target on domestic and political issues, we assume recovery in 2025F.

3Q24F net profit to rise YoY but fall QoQ. We estimate 3Q24F net profit at Bt727mn (+16.8% YoY but -43.6% QoQ), backed by revenue of Bt1.85bn (-12.6% YoY and -20.3% QoQ), on total land transfers of 330 rai, with ~190 rai from JV (IER projects). We expect gross margin from land sales to stay strong on both WHA’s own and JV sales, giving a 3Q24 average gross margin of 51.6%. If 3Q24F comes in as forecast, 9M24 net profit will be Bt3.38bn (+68.1%).

Growth remains strong in 2024-2025. WHA has current backlog of 1,250 rai, expected to be booked as revenue within 2025. Thus, we maintain our 2024 revenue forecast of Bt12.8bn (-13.4%), with average gross margin widening to 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 (IER). We thus expect a high net profit in 2024F of Bt4.99bn (+12.7%). In December it will sell Bt1.06bn in assets to WHAIR. We expect 4Q24F to be 2024’s best, backed by transfers of backlog.

Key Risk: We believe Thailand will benefit from geopolitical risk and investment relocation over the next few years. With the expansion of new economy ventures, we expect the country’s highly rated skilled labor force and efficient utilities to bring expansion in data centers, electronics and other higher-value sectors. We are also monitoring FDI and policy changes in important trading countries. For the utilities business, we also monitor regulatory risk and cost of raw materials.