Ananda Development Public Company Limited engages in the development of condominium projects and housing estates in Bangkok and its vicinity. The company is a leading real estate developer in Bangkok, with most of its condominium projects branded as “Ashton,” “Ideo,” and “Elio,” focusing on modern living styles and convenience. Most projects are located within a short distance from the BTS skytrain.

Investment Highlights of Ananda

First Highlight: Clear revenue growth in the second quarter of 2017, with revenue reaching 3.6 billion baht.

In the second quarter, the company reported revenue of 3.6 billion baht, a 64% increase from the previous quarter, indicating that the early part of the year was likely the company's low point. This was due to weak transfer rates as there were no new projects completed. The majority of revenue in the second quarter came from the Ideo Sukhumvit 115 project, valued at 2.8 billion baht, which currently has a sales rate of 74%. This project was launched in July 2015 and is located along the BTS extension from Bearing to Samut Prakan, expected to be operational within two years.

Second Highlight: Continuous growth in transfers and sales.

The company's transfer target for this year has been raised to 25 billion baht, representing a 58% growth from last year. This target is somewhat supported by a backlog of 16 billion baht this year.

The company has also launched 10 new projects in the first half of 2017, valued at 26.2 billion baht, with the latest presales from these projects at 15.5 billion baht, or 50% of the presales target of 31 billion baht for this year. The main contributors to this figure are the sales from Ashton Asoke and Ideo Q Siam-Ratchathewi, which are set to be completed this year and are located in prime areas close to major transportation hubs in central Bangkok, such as Asoke and Ratchathewi.

Third Highlight: Launching 17 new projects in 2017, totaling 42 billion baht.

In addition to the 10 projects expected to transfer this year, the company plans to proactively launch 17 new projects throughout 2017, with 9 projects already launched in the first half and 8 more planned for the second half, totaling 42 billion baht. Notably, four projects such as Ideo Q Victory, Ashton Asoke-Rama 9, Ideo New Rama 9, and Ideo Q Sukhumvit 36 were recently launched in June and received overwhelming responses, especially Ideo Q Victory, which was fully booked from the first day of reservations. These projects are expected to recognize revenue between 2019 and 2020, contributing to backlog growth and securing the company's revenue for the next three years.

Fourth Highlight: Decrease in cancellation rates and mortgage rejection rates for condominiums over the past three years.

Since 2015, the cancellation rate and mortgage rejection rate for purchasing condominiums have significantly decreased. The cancellation rate dropped from 6% to 2%, while the mortgage rejection rate fell from 15% to 7% in 2017.

It is evident that with the numerous project launches by the company, there is a substantial opportunity for revenue growth from the second half of 2017 to the next two to three years. Currently, the company's stock price is still considered relatively affordable compared to others in the same industry (P/E 10, industry average P/E 18). However, it is essential to hope that the booking and sales figures for the newly launched projects will meet the company's forecasts.

TerraBKK Research believes that real estate stocks currently exhibit a cyclical revenue recognition pattern, as continuous investment is required. The growth model is distinctly different from other types of businesses, and investors should regularly study information about companies in this sector.