BEST SMALL CAP COMPANY
L.P.N. Development
“L.P.N. Development isn’t just Thailand’s best property developer, it’s one of Asia’s best,” declares an equity strategist to Asiamoney.
The company specialises in building and selling low- to mid-range price condominiums in metropolitan Bangkok, and has for several years it has focused on conducting big launches for its projects, garnering plenty of publicity and buyer enthusiasm.
Real estate has been a tricky bet of late for Thailand, with the mass flooding of late 2011 having impacted market sentiment and hurting the prospects of many developers. However L.P.N. was fortunate, with its projects being largely spared the worst of the disaster.
During the first half of 2012 confidence in property was slow to return, but since July buyers began buying with more confidence as fears of further flooding receded. That has benefited L.P.N., with its highly public marketing.
As of the end of September the company’s condo pre-sales reached 94% of its 2012 full-year target of THB14.7 billion (US$479.34 million), according to CIMB Securities (Thailand). The company’s return on equity is around 30% and it has no debt on its balance sheet, giving it a lot of flexibility to continue investing into new projects.
The company’s success has gained the attention of more than just shareholders; in early September property developer Univentures agreed to acquire L.P.N.’s stake in its subsidiary, Grand Unity Development for around THB44 million. That helped to drive L.P.N.’s share price up to THB18.60 on September 10, a record high.
The company has big plans for 2013 too; according to media reports it is planning at least 10 projects worth between THB15 billion and THB20 billion to take advantage of rising housing prices. The average cost of residential units looks set to rise 5% overall during 2012 and could well increase further in 2013.
Provided L.P.N. can maintain a decent backlog of condos to sell and quickly build more (some project construction was delayed by the flooding), it should do well from these positive conditions.
BEST MEDIUM CAP COMPANY
BTS Group Holdings
If any company in Thailand successfully practices business diversity, it’s BTS Group Holdings. Best known as the operator of the Bangkok skytrain, BTS also possesses a sizeable property arm and media operations too.
The company has steadily improved the profitability of the skytrain while adding to the regularity of carriages. It also did well from the initial public offering (IPO) of media business VGI Global Media. The shares rose over 150% from their THB35 market debut on October 10 to THB92.50 on December 4.
Most excitingly, BTS is positioning itself to take advantage of an expansion to Bangkok’s mass transit network. In late November the company revealed plans for a THB50 billion (US$1.6 billion) Infrastructure Fund. Its intention is to inject the ticket revenues that it earns from its 17-year concession of the skytrain into the fund. It will then hold one third of the fund and sell the rest via an IPO in early 2013.
BTS hopes to raise around THB33.3 billion from the IPO, which if successful would be the largest listing conducted in the country. With their utility-like revenue stream, shares in the fund are likely to be popular among defensively-minded insurers and pension funds.
The company intends to use the proceeds of the IPO to invest into planned extensions of four mass transit routes, including extensions to the green line, the pink line and the light transit rail line, which will eventually stretch between Bangna and Suvarnabhumi Airport.
Analysts like the idea of the fund, noting that it ensures BTS gets guaranteed revenue streams while allowing it to invest into the much-needed rail extensions, which should also end up giving it new revenue streams. Putting the skytrain revenues into the fund also offsets tax expenses and help cushion BTS from the inevitable depreciation of the underlying assets.
Add into this the money BTS has already made from the skytrain business, its earlier VGI listing and a one-off sale of land at Sukhumvit, and the company looks set to enjoy its most profitable financial year yet.
BEST LARGE CAP COMPANY
CP All
On any given Bangkok street are two ubiquitous objects: pictures of the royal family and 7-Eleven stores. CP All is the operator of the latter.
What most impresses investors and analysts about the company is that it continues to defy their expectations. It already accounts for 70% of Thailand’s convenience store market, yet it has managed to continually add new stores without hitting a saturation point or decline in returns.
“It’s just a smart, well-run company that stays ahead of consumer preferences,” says a head of equity strategy in Bangkok. “For example, CP All began adding ready to eat meals early on, it has more recently included coffee stalls and it is adding pharmacy counters too. These have all been very astute business plays for Bangkok’s increasingly busy population.”
This anticipation of consumer preferences has kept CP All’s business water-tight. The group reported a record third-quarter for 2012, with net income up 33% to THB2.9 billion, up from THB2.17 billion a year earlier. That’s particularly impressive given that the third quarter of the year tends to be a slow period for Thailand’s retail sector.
Despite the proliferation of 7-Eleven stores, CP All isn’t done expanding. According to Reuters, the group intends to invest THB5 billion-THB5.5 billion in both 2012 and 2013 to open 500 new outlets. That would take its network to 7,000 by the end of 2013.
The market has rewarded the company’s performance. Its share price has soared from THB26.13 at the beginning of 2012 to THB40.15 on December 3. There are plenty of believers, as well as shoppers, in CP All.
BEST EXECUTIVE
Prasert Prasattong-Osoth, group CEO and president, Bangkok Dusit Medical Services
Thailand’s reputation for offering high quality and relatively low cost medical services has been growing for years, resulting in increasing numbers of medical tourists flocking to the country.
In large part this is thanks to Bangkok Dusit Medical Services, and in particular to its president, chief executive and chairman of the executive committee, Prasert Prasattong-Osoth.
Over the past decade Prasattong-Osoth has, in various senior job capacities, guided the development of the company’s five-star hospitals to offer specialist medical services to the local middle class and overseas patients. It’s been highly successful; increasingly affluent locals are taking more care over their health while more tourists are seeking to combine holiday with health, and now make up 27% of the company’s revenue flows.
The business model has its copycats, but Bangkok Dusit Medical remains by far the largest player in Thailand, boasting 26 local hospitals and two more in Cambodia.
“You have to recognise Dr. Prasert for his vision over the past decade in building the business,” the head of research at a Thai securities company says. Others add that he has ensured company growth while maintaining the company’s capital discipline, which has helped to reward shareholders.
The company has maintained its positive trajectory even during the more troubled waters of 2012. During the first three quarters of 2012 the company’s revenues from hospital operations were THB32.66 billion and it earned THB4.74 billion, up 27% and 57% year-on-year, respectively.
The growth was largely the result of a 27% rise in patient revenue, as the company both charged more per patient for its services and gained more patients overall. Bangkok Dusit Medical also benefited from its astute investments into Bumrungrad and Ramkhamhaeng Hospital, which both added to its bottom line.
The company has achieved all of this while maintaining a net debt to equity ratio of just 0.4 times. It is in very healthy financial shape.
This has benefited shareholders, with Bangkok Dusit Medical’s stock price rising from THB82.50 at the beginning of 2012 to close at THB112 on December 4. The stock went up despite the company conducting an equity offering in March for 238.8 million shares at THB1 apiece, and one of the company’s founding families selling its 9.97% stake via a block sale in October.
Evidently the market has faith that Prassatong-Osoth will continue to drive his business’s growth.
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