The Harvest Time for S..!

The share price of Singha Estate Public Company Limited (S) has continuously increased to 12.88% in June in the midst of curiosity on what was the cause of this rally? In fact, S is categorized as a fundamentally strong stock.

In 2014, after Singh Property Group indirectly entered the stock market through the backdoor listing of Rasa Property Development Public Company Limited (RASA), the company had changed its name to Singha Estate Public Company Limited (S) and transferred the entire business from Singh Property Group to S.  

As a result, the development of the revenue and profit of S has been growing by leaps and bounds. 

In 2015, S reported a net loss by THB 260.84 million from a total revenue of THB2,316.18 million. In 2016, the turnaround of S gained a net profit of THB170.23 million from a total revenue of THB3,657.62 billion. In 2017, S booked a net profit of THB571.88 million from a total revenue of THB6,220.62 million and in 2018, a net profit hiked to THB1,286.71 million from the total revenue of THB8,935.94 million. 

The latest in 1Q/2019, S had gained a net profit of THB293 million, increased 13% when compared to the same period of the year 2018 with a net profit of THB259 million while recorded a total revenue of THB 3,000 million, increased by 167% when compared to the same period of last year from a total revenue of THB 1,123 million. 

It was not too long until S was listed as an outperforming stock in the sector. Unfortunately, S’s share price was not responding to its high revenue growth as much as it should be. 

The share price was always at ฿3.00/share for years. So, the rally this time might be a new hope of S’s share price to break the wall to ฿4.00/share because S has positive factors to support in all perspective. 

The direct factor would be the recognition of revenue from big projects, especially, the condominium projects such as The EssesAsoke, The Esse at Singha Complex project and Single house at Santiburi Project. 

As for the indirect factor would be the constant recognition from holding 25% in the trust fund SPRIME, and also the recurring income from the rental of Singha Complex and Lighthouse, making this year the most anticipated year for investors to harvest from what S had been invested for the past 2-3 years. 

This does not include the new business which S is preparing to submit S Hotel Resort and Spa Public Limited Company (SHR), a subsidiary company, which operates hotel business and expects 39 hotels totally 4,647 rooms in 5 countries, to list in the stock market by the end of this year. 

The IPO will not exceed 1,437 million shares. S is expected to receive approximately THB5,000-6,000 million of working capital.  As a result, S will have a better financial status while lowering the debt-to-equity ratio from 2.24x in 2018 to 1.6x in 2019.

Moreover, S has set the investment cost of THB 8,000 – 10,000 million in 2019 to increase its revenue growth to THB 20,000 million within 2020 while stepping forward to be a completely Global Holding Company.

Lately, it is rumored that a businessman in jade and ruby mining from Myanmar interested in joining the business with S for developing the project in both Thai and Myanmar. 

The analyst recommends “BUY” S with the 12 months target price at ฿4.20/share. So, There is a wide upside for this. 

This is a good time for those who wanted to keep S in the portfolio or it doesn’t matter if someone looks differently.