Overview

In the latest report by UOB Kay Hian, Origin Property, a prominent real estate development company in Thailand, has been the focus of extensive analysis. The company, which covers the entire real estate industry and related businesses, is navigating through challenging times. This article delves into the comprehensive financial outlook, covering all aspects of Origin Property’s performance and strategic direction as we approach 2024.

Market Position and Strategic Adjustments

Origin Property has maintained a ‘HOLD’ recommendation, with its share price currently at Bt4.22 and a revised target price of Bt4.10, indicating a slight downside of -2.8%. The company’s cautious approach is attributed to headwinds in the residential market, prompting management to lower presales targets and scale back on project launches for 2024.

Despite the challenging market conditions, 4Q24 earnings are expected to improve, supported by newly completed projects. However, the residential sector is anticipated to face persistent challenges in 2025, exacerbated by a tight financial position. This has led to a more conservative stance on new project launches, advising investors to wait for new market catalysts.

Presales and Project Launches

Origin Property has revised its 2024 presales target to Bt35 billion from the previous Bt40 billion, marking a 13% reduction. This decision stems from weaker presales of Bt26.8 billion in the first nine months of 2024, a significant 27% year-on-year decline. The underperformance highlights subdued demand and a cautious approach towards project launches as the company awaits market recovery.

The 2024 launch plan has been reduced by 34% from Bt37 billion to Bt24.5 billion, with allocations of Bt14.5 billion in the condo segment and Bt10 billion in the low-rise segment. For 2025, project launches are expected to remain similar, as the company focuses on reducing inventories.

Financial Performance and Dividend Announcement

In 4Q24, earnings are projected to improve from a low base, driven by newly-completed projects such as SO PHAHOL 69, Knightsbridge Space Sukhumvit-Rama4, and Origin Plug & Play Sirindhorn Station. However, the gross margin may see slight compression due to aggressive promotional campaigns. ORI announced an interim dividend of Bt0.021 per share, reflecting a modest yield of 0.5%, indicative of the company’s tight financial position and a high interest-bearing debt-to-equity ratio of 1.7x as of 3Q24.

Key Financial Metrics and Future Outlook

The financial outlook for Origin Property shows a decrease in net turnover and EBITDA from 2023 to 2024, with a gradual recovery anticipated by 2026. The company faces declining net profit margins and a high net debt-to-equity ratio, emphasizing the need for improved financial strategies. The company’s profitability metrics, such as EBITDA margin and ROE, reflect the ongoing challenges in the market.

For 2024, the company expects a reduction in sales and services by 5.2%, with a more conservative approach to revenue and gross margin assumptions. This has resulted in a revised target price, based on a 5.7x 2025F PE, significantly below its five-year historical mean.

Environmental, Social, and Governance (ESG) Initiatives

Origin Property is committed to environmental sustainability and social responsibility. The company has implemented energy conservation and environmental protection policies, aligned with international standards. It promotes fair labor practices and supports global Sustainable Development Goals, fostering a family-like work environment. On governance, Origin Property adheres to guidelines set by the Stock Exchange of Thailand and the SEC, ensuring good corporate governance practices.