We forecast SIRI’s 2Q23F net profit at Bt1.6bn (+74.5% YoY and +1.2% QoQ) backed by more backlog transferred, stable gross margin and extra gain from sale of land to its JV. We expect SIRI to show a strong 2023 net profit of Bt5.5bn, 30% growth, with core profit up 15% to Bt4.9bn. We roll our TP to 2024 to Bt2.20/share and we keep our tactical call of Neutral.
2Q23F growth YoY and QoQ backed by extra gain: We estimate SIRI’s 2Q23F net profit at Bt1.6bn (+74.5% YoY and +1.2% QoQ) backed by: 1) total revenue of Bt9.3bn (+28.5% YoY and +22.1% QoQ): 57% from low-rise, 32% from condos and 11% from other businesses. In the quarter, transfers began at Narasiri Phahol-Watcharapol and Setthasiri Don Mueang, totaling nearly Bt1bn.2) Gross margin was stable at 32.4%, close to 32.3% in 1Q23 and up from 30.5% in 2Q22, 3) extra gain of Bt470mn from sale of land to its JV for the Narasiri project. If 2Q23F net profit comes in as forecast, it will give 1H23F net profit of Bt3.18bn (+161% YoY) with core profit of Bt2.56bn (+110% YoY).
Presales 1H23 at 39% of year’s target. SIRI reported 2Q23 presales of Bt10bn (+37% YoY and +24% QoQ), of which 61% was low-rise with a growth in value of 18% YoY and 47% QoQ backed by the launch of Narasiri Phahol-Watcharapol (project value Bt5.6bn, 125 units with 18% sold) and Setthasiri Don Mueang (project value Bt4.3bn, 263 units with 25% sold) in the luxury segment and 39% from condos, with value 184% YoY and 11% QoQ. This gives it 1H23 presales of Bt18bn (+36% YoY) equal to 39% of 2023 presales target of Bt47bn (+22% YoY).
Maintain new launches at Bt75bn, a new high. In 1H23, SIRI launched Bt18.5bn in new projects, by value 93% low-rise and 7% condos. It continues to plan to launch Bt75bn in projects this year (+46% YoY), leaving Bt56.5bn to be launched in 2H23, including ten Setthasiri projects, high-end condominiums in Ratchathewi and Aree, as well as the RTM condominium, Nia by Sansiri. We thus expect to see presales rise from 2Q23 on more new launches.
High growth in 2023. We maintain our 2023F revenue forecast at Bt39.8bn (+15.7% YoY) with recognition of low-rise backlog mostly in 4Q23. Our net profit forecast, which factors in an asset gain in 1Q23 and extra gain from land sold to its JV in 2Q23, is Bt5.5bn, 30% growth, with core profit of Bt4.9bn (+15%). Backlog in 2024F (including the JV) will be Bt6.6bn. We maintain our revenue growth forecast of 7.5% with core profit without extra gain of Bt4.75bn (-4%).
Risks and concerns. 1) DE ratio is high at 1.99x, so cash flow and interest expenses need to be monitored. 2) Since SIRI carries low-rise luxury backlog that is mostly scheduled for transfer in 2H23, the amount and timing of transfers will need to be monitored. 3) Another minimum wage increase would raise total cost of goods sold and selling price.
2024TP of Bt2.20. We keep our tactical call of Neutral with a rolled-over 2024 TP of Bt2.20 based on PE of 7.2x (+0.25SD).
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