THAILAND EQUITY RESEARCH

Page | 1 | PHILLIP SECURITIES (THAILAND)

Sansiri

Challenging business targets for FY16

THAILAND | SET | PROP | COMPANY VISIT BLOOMBERG SIRI TB l REUTERS SIRI.BK

Challenging business targets for FY16 Management has set its FY16 presales target of Bt42bn, up as much as 47% from Bt28.5bn in FY16 on expectations that SDH/TH presales will rise 34% y-y to Bt14.7bn and condo presales will surge 56% y-y to Bt27.3bn. To achieve the target, SIRI plans to increase the number of new project launches from 11 projects worth Bt22.1bn last year to 21 projects worth Bt50.4bn this year, comprising 7 single-detached house projects worth Bt13.7bn, 3 townhouse projects worth Bt1.7bn and 11 condo projects worth Bt35.1bn including 6 condo projects developed by its JV with BTS worth Bt22bn. In our view, the targets looks challenging in the face of the current overall economic environment and due to its greater focus on new condo launches against the current backdrop of still-weak condo market conditions. In SDH/TH market, SIRI would focus largely on high-end market. The low-end market would account for only 13% of new project launches with 41% for mid-end market and 46% for high-end market. The new condo launches would also focus on high-end market in prime locations like Thonglor, Sukhumvit and Wirless Road. All these have led SIRI to set quite ambitious targets for FY16. However, we take a cautious view on its targets. We assume FY16 SDH/TH presales will rise only 5% y-y, and condo presales will come in at Bt19bn in FY16 based on assumption of a 40% average take-up rate for its newly launched condo projects, translating into presales of Bt14bn with the rest Bt5bn from sales of existing condo inventories. In addition, SIRI has also guided for FY16 revenue of Bt35bn, which would also be quite a challenging target to achieve as it currently has a backlog of a mere Bt11.4bn to be booked as revenue in FY16, covering only 33% of its full-year forecast. To meet the target, the rest should come from sales of SDH/TH projects during the year, sales of existing condo inventories at around Bt7bn and sales from 2-3 new pre-built condo projects which would be ready for transfer this year. One of the pre-built condo projects will be a high-end, luxury condo project on Wireless Road under the name ’98 Wireless’ worth Bt8bn with current bookings from VIP clients now topping Bt2.5bn while the other two pre-built condo projects will tap the mid-end segment worth Bt3bn. Overall we see its FY16 targets as quite challenging, in our view. Declining profit outlook for FY16 We cut our FY16 profit outlook for SIRI by 8% but we raise our FY15 profit forecast for SIRI by 15% to factor in expectations that 4QFY15 revenue would come in higher than our earlier forecast of Bt33bn at Bt35bn, which would in turn cause FY15 revenue to exceed our previous forecast and backlog carried forward into FY16 to be smaller than previously thought. In our new forecast, we expect SIRI to report an 11% y-y rise in FY15 core profit on expectations of a 30% y-y growth in full-year revenue, which would be strong enough to offset a sharp margin contraction to 29% from 33% and a loss contribution from its JV with BTS. For FY16, we see an 11% y-y drop in core profit given that there would be a backlog of only Bt11bn carried forward into FY16 and we expect only a 10% y-y growth in FY16 SDH/TH presales, well below management’s guidance of 34% and our forecast for sales of existing condo inventories is also lower than the company’s target. Our forecast assumes (i) FY16 revenue will be down 7% y-y against management’s flat revenue guidance, (ii) margins will be flat and (iii) loss from JV with BTS will double to Bt500mn from Bt230mn a year earlier. Rating cut to ‘NEUTRAL’ with Bt1.50/share target price Following the above earnings cut, we slash our target price for SIRI to Bt1.50/share from Bt1.68/ share. We also reduce our rating on SIRI to ‘NEUTRAL’ as the new target offers limited upside from current trading levels.

Ref. No.: CO2015_0059

Closing Price(Bt) 1.49

Target Price(Bt) 1.50 (+3.01%)

COMPANY DATA

O/S Shares (mn) : 14,286

Market Cap. (Btmn) :

Market Cap. (USDmn) :

52-WK Hi/Lo (Bt) : 2.12/1.44

3M Average Daily T/O (mn) : 36.27

Par Value (Bt) : 1.07

MAJOR SHAREHOLDERS (%)

1. Viriya Casulty Insurance 6.3

2.UBS AG SINGAPORE BRANCH 4.7

3. Thai NVDR 4.7

PRICE PERFORMANCE (%)

1MTH 3MTH 1YR

ABS 0% -14% -9%

REL TO SET INDEX -1% -4% 12%

PRICE VS SET INDEX

Source: Bloomberg, PSR

KEY FINANCIALS

FYE Dec FY14 FY15E FY16E FY17E

Sales(Btmn) 28,435 37,483 35,930 36,766

Net Profit(Btmn) 3,393 3,668 2,662 3,661

EPS (Bt) 0.33 0.24 0.17 0.24

P/E (X) 4.5 6.2 8.6 6.2

BVPS (Bt) 1.82 1.92 2.02 2.24

P/B (X) 0.8 0.8 0.7 0.7

DPS (Bt) 0.12 0.09 0.03 0.05

Dividend Yield (%) 8.1 5.8 2.3 3.2

ROE (%) 16.20 14.04 9.46 12.03

Debt/Equity (X) 3.06 2.53 2.40 2.28

Source: Company, PSR Est.

**Multiples and yields are based on latest closing price

VALUATION METHOD

P/B'16 (8.5x)

Danai Tunyaphisitchai, CFA

Capital Market Investment Analyst # 2375

Tel: 66 2 635 1700 # 481

21,285

591

18 March 2015

Neutral (Downgraded from Acccumulate)

25 January 2016

0

2

4

6

Jan-13 Jan-14 Jan-15 Jan-16

SIRI TB EQUITY SETI (rebased)

THAILAND EQUITY RESEARCH

PHILLIP SECURITIESS (THAILAND) | 2 | P a g e

Corporate Governance -2015

ADVANC BAFS BCP BIGC BTS CK CPN DRT DTAC DTC

EASTW EGCO GRAMMY HANA HMPRO INTUCH IRPC IVL KBANK KCE

KKP KTB LHBANK LPN MCOT MINT MONO NKI PHOL PPS

PS PSL PTT PTTEP PTTGC QTC RATCH ROBINS SAMART SAMTEL

SAT SC SCB SCC SE-ED SIM SNC SPALI THCOM TISCO

TKT TMB TOP VGI WACOAL

AAV ACAP AGE AHC AKP AMATA ANAN AOT APCS ARIP

ASIMAR ASK ASP BANPU BAY BBL BDMS BECL BKI BLA

BMCL BOL BROOK BWG CENTEL CFRESH CHO CIMBT CM CNT

COL CPF CPI CSL DCC DELTA DEMCO ECF EE ERW

GBX GC GFPT GLOBAL GUNKUL HEMRAJ HOTPOT HYDRO ICC ICHI

INET IRC KSL KTC LANNA LH LOXLEY LRH MACO MBK

MC MEGA MFEC NBC NCH NINE NSI NTV OCC OGC

OISHI OTO PAP PDI PE PG PJW PM PPP PR

PRANDA PREB PT PTG Q-CON QH RS S & J SABINA SAMCO

SCG SEAFCO SFP SIAM SINGER SIS SITHAI SMK SMPC SMT

SNP SPI SSF SSI SSSC SST STA STEC SVI SWC

SYMC SYNTEC TASCO TBSP TCAP TF TGCI THAI THANA THANI

THIP THRE THREL TICON TIP TIPCO TK TKS TMI TMILL

TMT TNDT TNITY TNL TOG TPC TPCORP TRC TRU TRUE

TSC TSTE TSTH TTA TTCL TTW TU TVD TVO TWFP

TWS UAC UT UV VNT WAVE WINNER YUASA ZMICO

2S AEC AEONTS AF AH AIRA AIT AJ AKR AMANAH

AMARIN AP APCO AQUA AS ASIA AUCT AYUD BA BEAUTY

BEC BFIT BH BIG BJC BJCHI BKD BTNC CBG CGD

CHG CHOW CI CITY CKP CNS CPALL CPL CSC CSP

CSS CTW DNA EARTH EASON ECL EFORL ESSO FE FIRE

FOCUS FORTH FPI FSMART FSS FVC GCAP GENCO GL GLAND

GLOW GOLD GYT HTC HTECH IEC IFEC IFS IHL IRCP

ITD JSP JTS JUBILE KASET KBS KCAR KGI KKC KTIS

KWC KYE L&E LALIN LHK LIT LIVE LST M MAJOR

MAKRO MATCH MATI MBKET M-CHAI MFC MILL MJD MK MODERN

MOONG MPG MSC MTI MTLS NC NOK NUSA NWR NYT

OCEAN PACE PATO PB PCA PCSGH PDG PF PICO PL

PLANB PLAT PPM PRG PRIN PSTC PTL PYLON QLT RCI

RCL RICHY RML RPC S SALEE SAPPE SAWAD SCCC SCN

SCP SEAOIL SIRI SKR SMG SOLAR SORKON SPA SPC SPCG

SPPT SPVI SRICHA SSC STANLY STPI SUC SUSCO SUTHA SYNEX

TAE TAKUNI TCC TCCC TCJ TEAM TFD TFI TIC TIW

TLUXE TMC TMD TOPP TPCH TPIPL TRT TSE TSR UMI

UP UPF UPOIC UREKA UWC VIBHA VIH VPO WHA WIN

XO

Score Range

< 50%

50-59%

60-69%

70-79%

80-89%

90-100%

The disclosure of the survey result of the Thai Institute of Directors Association (IOD)

regarding corporate governance is made pursuant to the Office of the Securities and

Exchange Commission. The survey of the IOD is based on the information of a company

l isted on the Stock Exchange of Thailand and the Market for Alternative disclosure to the

public and able to be accessed by a general public investor. The results, therefore, is from

the perspective of a third party. It is not an evaluation of operation and is not based on

inside information.

The survey result is as of the date appearing in the Corporate Governance Report of Thai

Listed Companies. As a result, the survey result may be changed after that data. Phil l ip

Securities (Thailand) of securities company does not confirm nor certify the accuracy of

such survey result.

No logo given

Number of Logo

Results Presentation

THAILAND EQUITY RESEARCH

PHILLIP SECURITIESS (THAILAND) | 3 | P a g e

Industry Group Name Sector Name Sector Index

Agro & Food Industry[AGRO] Agribusiness AGRI

Food & Beverage FOOD

Consumer Products[CONSUMP] Fashion FASHION

Home & Office Products HOME

Personal Products & Pharmaceuticals PERSON

Financials [FINCIAL] Banking BANK

Finance & Securities FIN

Insurance INSUR

Industrials [INDUS] Automotive AUTO

Industrial Materials & Machinery IMM

Packaging PKG

Paper & Printing Materials PAPER

Petrochemicals & Chemicals PETRO

Steel STEEL

Property & Construction[PROPCON] Construction Materials CONMAT

Construction Services CONS

Property Development PROP

Property Fund & REITs PF&REIT

Resources [RESOURC] Energy & Uti l ities ENERG

Mining MINE

Services [SERVICE] Commerce COMM

Media & Publishing MEDIA

Health Care Services HELTH

Tourism & Leisure TOURISM

Professional Services PROF

Transportation & Logistics TRANS

Technology [TECH] Electronic Components ETRON

Information & Communication Technology ICT

PSR Rating SystemCapital Gain Recommendation

> 15% BUY

> 5% - 15% ACCUMULATE / TRADING BUY

> 0% - 5% NEUTRAL

0 <= SELL

Remarks

We do not base our recommendations entirely on the above quantitative return bands. We consider qual itative factors l ike (but

not l imited to) a stock's risk reward profi le, market sentiment, recent rate of share price appreciation, presence or absence of

stock price catalysts, and speculative undertones surrounding the stock, before making our final recommendation

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