Origin Property Public Company Limited is a real estate development company that is currently attracting attention. The company focuses on developing real estate projects with unique designs (Uniqueness Project Design) and is one of the pioneering developers of condominium projects near the BTS Bearing station in Samut Prakan province.

            As of Q2 2017, the company's operations have significantly raised their targets, especially in key areas such as total revenue and backlog, which increased by 50% and 76%, reaching 9,000 million and 25,000 million baht, respectively. These figures are quite substantial given the company's current valuation.

 

Investment Issues of Origin

 

          The first issue is revenue growth in 2017, which has the potential to grow by 50%

The company has revenue from the sale of the Park 24 project, valued at 17,000 million baht, with current sales at 64%, amounting to approximately 10,900 million baht. Revenue recognition will continue until the end of 2019, with the first revenue expected to be recorded at 3,000 million baht in Q4 2017. The project is located between Sukhumvit Soi 22 and 24, in the heart of shopping and dining areas around Phrom Phong, and is expected to be completed in 2018.

Additionally, there is potential revenue growth from the company's total backlog, which currently stands at approximately 25,000 million baht. This is a significant figure, as projects such as KnightsBridge, Kensington, and Notting Hill will gradually recognize revenue from Q3 2017 to Q4 2018.

The second issue is the launch of new projects in the second half of the year, especially projects co-invested with Nomura Real Estate Development, totaling 4 projects valued at 7,400 million baht

The company plans to launch approximately 6 more projects in the second half of the year, with a total value of 8,600 million baht. Notably, the projects co-invested with Nomura Real Estate Development, a major Japanese real estate developer, will have a 51:49 investment ratio, totaling 2,156 million baht. These projects, set to launch in Q3 2017, include KnightsBridge Prime Onnut, KnightsBridge Prime Ratchayothin, KnightsBridge Collage Ramkhamhaeng, and KnightsBridge Kaset Society. The selling point of these projects will focus on the convenience of living, proximity to dining options, and ease of transportation, as all projects will be within 600 meters of the BTS.

The third issue is revenue from selling shares in subsidiaries to Nomura Real Estate Development, amounting to approximately 800 million baht

The company will see short-term profit gains from recording a one-time special profit from selling investments in subsidiaries to Nomura Real Estate Development, which includes Origin Prime 2, Origin Ramkhamhaeng, Origin Sphere, and Origin Vertical. Profits are expected to be recorded in Q4 of this year.

            What will clearly drive the company's growth now is the continuous inflow of revenue. If the sales in the second half of the year meet expectations, it should allow the company's total revenue for this year to reach the set target. The combined revenue from the special profit recognition and revenue from the Park 24 project alone is approximately 4,000 million baht, plus the revenue from the first two quarters, which totals around 3,000 million baht. This means the company only needs about 2,000 million baht to reach the anticipated target for the year, which is a significant figure and will lead to a substantial increase in total revenue this year. However, investments must be approached with caution, as current stock prices reflect expectations of revenue from various projects. Another important factor is that the company's revenue model includes special income from joint ventures with new partners, and there is a need for substantial reinvestment from these projects, leading to changes in the current revenue model.

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