ORI’s 2021 Profit to Outpace Property Dev. Sector as the Analyst Recommends BUY at Bt10

KTB Securities (Thailand) (KTBST) has given a “BUY” recommendation on Origin Property Public Company Limited (ORI) with a target price at ฿10.00/share, stating that ORI’s 2021E profit is likely to outpace the sector.

 

KTBST stated that it was positive about ORI’s guidance after the group conference call with the company on December 25, 2020, which was in line with KTBST’s forecast. First, ORI has forecasted the domestic residential market to grow +15% in 2021E compared to a decline by between 15-18% in 2020E. Second, the company has set its 2021E pre sales growth target of 10%, at least, from an estimate of Bt25.0-26.0bn in 2020E. Last, the company has a plan to launch new projects worth a combined Bt20.0bn in 2021E (50% each in condo and SDH/TH projects) compared to Bt13.2bn in 2020.

 

The security company maintained its 2020E core profit forecast at Bt2.7bn, which indicates a rise of +4%, while the residential property sectors profit is projected to drop -30%. In 4Q20E, core profit is expected to become a banner quarter of the year, potentially rising +16% YoY on the back of a launch of six condo projects.

In 2021E, KTBST forecasted core profit to jump +20% to Bt3.2bn in expectation of a start of new condo transfers, which is expected to outpace the sector’s average growth of +18%.

 

ORIs share price gained in the three-month and six-month timeframes and thereby outperformed the SET Index by 6-42%, respectively. KTBST foresaw the brighter earnings outlook in 4Q20-2021E and a sizable backlog, which has covered KTBST’s 2020-21E revenue forecast.

Furthermore, the company’s revenue diversification should bode well for its earnings outlook, as it aims to launch more SDH/TH projects in the foreseeable future. Additionally, the stock currently trades at an undemanding 2020E PER of 6.2x, which is well below the sector’s average level of 10.2x.

 

In addition, KTBST reiterated a BUY rating on ORI and a target price of Bt10.00, which is pegged to 2021E PER of 7.8x (its 5-yr average level).