ALL: Slowing Down but There Is Still Upside
We maintain our BUY recommendation on ALL but revise down our target price to Bt4.00 (previously Bt4.39), implying an upside of 23% 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: Third-quarter revenue was down 55% YoY, and ALL made a net loss before unusual items. Overall, the 3Q20 results make us revise down our 2020E forecast significantly. We expect a slowdown in sales and recognition of current projects.
Risks: Increased competition and slowdown in demand for residences, rising land and construction costs, delayed construction and transfer of projects, access to capital.
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