L.P.N. Development

Q3 2012A: in line, peak in Q4 2012
Upgrade to Neutral

L.P.N. Development Plc (LPN)

Profits in line. Net profit was Bt541mn, -38% YoY and +267.8% QoQ. The QoQ robust

growth was due to higher deed transfers upon completion of Lumpini Park Riverside

Rama 3 and Lumpini Ville Phibulsongkram River View and better gross margin due to

large contribution from a 34-35% high-margin for Lumpini Park Riverside Rama 3 (AB).

9M12 net profit is Bt987mn, -47% YoY, 44% of our 2012 forecast and consensus. We

expect a strong 4Q12 and thus maintain our forecast. We roll valuation to end 2013

which raises PT to Bt19.5/share. LPN's share price has come down ~8percent since we

downgraded and valuation now looks justified at current price; we upgrade to Neutral.

We still prefer QH, SIRI and AP, where growth is intact and valuations more attractive.

Key takeaways from analyst meeting:

YTD presales: Bt17bn, exceeding its full year target of Bt16bn, on good response to LPN

CondoTown Chonburi-Sukhumvit, this year's final launch.

2013 presales growth target: 15% to Bt20bn, with 10-11 new projects of Bt20bn. 2013

revenue growth target: 10-15% to Bt15bn (only LPN), in line with SCBS. Pornsanti Co

will contribute 10% of LPN's profit, but not for a few more years. It is adding Cha-Am

and Hua Hin to existing markets in Chonburi and Pattaya.

Backlog Bt21bn, fully securing our 2012 forecast, 67% of 2013 and 15% of 2014.

Q4 2012F: Record revenue of ~Bt8bn, but 3Q12's high gross margin of 34.7% is unlikely to

be repeated since it is mostly low-margin projects (

company's margin guidance for 2012 is unchanged at 30-31%. It will also book

~Bt40mn capital gain from sale of Grand Unity.

LPN Ville Srinakarin-Bangna (value Bt700mn) is being canceled as the draft zoning law

prohibits this large a building fronting that small a road. We do not see this as having

an impact on LPN's 2013 income as it is small. However, if LPN gets a construction

permit before the new zoning law takes effect, it will re-launch the project. It can still

develop TH or home office on this land.

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Article source: http://www.thethailandlinks.com/2012/11/05/l-p-n-development/