ANAN Development

Is this the end of ANAN Development Public Company Limited (ANAN)’s share? The share has been falling nonstop, even though its 3Q18 profit was not bad at all. ANAN recorded ฿976 million of profit from 3Q, yet, the share plunged a total of 20% both before and after the report of its 3Q financial statement. The main reason for this constant plummet can be found in ANAN’s 3Q financial statement. After a closer look at the statement, the revenue from the sale of real estate fell 13% YoY from ฿1,692 million to ฿1,474 million, nibbling its total revenue by 2.2% YoY from ฿2,758 million to ฿2,697 million YoY. ANAN’s gross profit also declined 15% YoY from ฿1,052 million to ฿893 million. More importantly, the operation profit slumped as much as 74% YoY from ฿402 million to ฿104 million. What really boosts ANAN to record ฿976 million of profit in 3Q or 593% growth from 141 million YoY, is the gain from investments in joint ventures at ฿982 million, a jump from a ฿113 million loss YoY. However, the gross profit margin decreased from 35.2% to 29.5%, which clearly means a lower record of margin. What to worry is not this year, but the next as the acceleration of profit shares from its joint ventures have all been recorded as profits in 2018, such as, Ashton Chula-Silom, Ashton Asok, Ashton Silom, Ideo Mobi Sukhumvit 65, Ideo Phaholyothin-Jatujak, Ideo Sukhumvit 93 etc. This will cause ANAN’s gross profit margin to be narrower and shrinking in profit shares. ANAN will likely face new problems next year as The Bank of Thailand’s new mortgage lending requirements that require borrowers to make a down payment of at least 10-30%. The company may take a hit on the new pre-sales in the upcoming year that could plunge its profit. Moreover, how can ANAN be able to overcome the currently strained real-estate business? That is why investors commit a huge selloff on ANAN and raising the doubts whether ANAN has come to a dead end?