ALL: Intense Price Competition Drags on Growth Prospects

We downgrade our recommendation to HOLD from BUY and reduce our target price to Bt3.49 (previously Bt4.00), implying a downside of 5% from the current price. We derive our target price from a 20% discount to the 2021E PE ratio of Asia ex Japan Real Estate and apply a 15% small-cap discount.

Investment thesis:

• Recent investment in shopping mall diversifies revenue stream
• Partnership with Japanese firms as a gateway to efficient residential development
• Pipeline residential projects ensure constant near-term growth

Interim: The 4Q20 results provided mixed signals. While the high revenue was a positive surprise, the pandemic has caused price competition, resulting in lower margins. We expect that the Real Estate sector continues to face hardship throughout 2021.

Risks: Increased competition and slowdown in demand for residences, rising land and construction costs, delayed construction and transfer of projects, access to capital.