My earnings model-projection going forward for PPS.

PaulRen's picture
Company Articles

Here is my own earnings model/projection going forward for PPS (0.80),  post closely following and now fully understanding what they plan to do.  Remember from my just last member article, PPS will purchase the entire Cape Yamu, Phuket peninsula land and then immediately start selling 9 highest end villa's.  One is already sold and paid for, another is in the design process.  Here are my Projections:

Core net earnings projected for 2020:....35 Mill. Baht   (PPS stated it has over 400 mill. backlog,  various pent-up projects are being implemented now, post Thailand returning to democracy).

Net profit from on sale of 2 villas:.........110 mill Baht  (The new project has already sold 1 Villa and 2nd in design process, mgt. states 55 mill profit per Villa)

Net profit from ONEWORKS..................25 mill. Baht  (This is difficult to gauge, but I am. very confident they will soon get contracts for design of Airports in Thailand.

Yearly interest Expense on bond:............. - 42 mill Baht.  (This is assuming the indicated 7% interest which will be paid on these 600 Mill.  2 year bonds)


Net profit projected for PPS for calender year 2020:  128 million Baht (sum of above).  As there are at present 859,855,142 total  shares outstanding (not expected to increase for now),  the projected next profit per share is  (123 million Baht divided by 859,855,142 shares)  =  0.1488 Baht, per share. EPS.   Realize PPS immediately books some 55 mill. Baht profit for each Villa's when sold, through the land sale.  PPS then further makes some profit on building the high-end Villa, for the purchaser.  Purchasers' of the Villa's will have to make a substantial down payment (40 to 50%) beyond the land so to guaranteed completion.

PPS is listed in the property and construction sector which has an average p/e of around 20, hence 20 times 1.488 Baht =  2.97 Baht.  In time its p/e could be re-rated upwards as it plans expanding more into health-centers. Health related stocks trade at double the p/e here as compared to the sector PPS now is in.

Some notes:  The 1st Villa which is already sold will result in net earnings to PPS,  this has been double confirmed to me,  but we don't know the exact profit on the first Villa and if this will (likely) be generated this year, or next?  Its very conservative to assume only one additional Villas will be sold next year, as mgt. indicates it is confident it will sell all 9 Villa's will, within 2 years.   In their presentation to the shareholders last week they conservatively assume 4 years, to sell all 9.  Hence the above is rather conservative and there is much upside if they sell more then one next year.  If they sell a total 3 Villa's next year (incl. first one sold already) profits will roar up to 178 mill. !    Then stock price will likely rock up above 3 Baht.
Of course, Mr. market may not give them the full p/e ratio on those earnings as it could assume this is not reoccurring.  On the other hand they plan having the health-center up and running before end of 2020 as well as a newly formed property mgt company which will manage all this and other Villas in that area which are all seeking this (now lacking).  Hence regular new recurring earnings will start coming in just as the 9 Villas are sold out by say year 2022.  By then PPS will be an established very high end property developer as well as expand its "young-old" health center concept and ONEWORKS looks very promising as well, because Thailand has stated it wants to be an Aviation center and is going all out on designing newly upgraded existing airports.
On the above reasoning and assumptions, PPS stock price is presently trading at only 27% its potential of 2.97, or say right around 3 Baht, end of next year.  The company states it pays out 40% of its earnings in dividends, so this would come to 15% on the current stock price of 0.80 Baht.  Even if the company sells only one Villa per year (very unlikely) and/or even if the market only gives it a p/e ratio of say 12-15 (also unlikely) one can readily see the tremendous potential stock price appreciation with the near future, or say before year end 2020. 
Some property agents here, while always acclaiming how good property appreciation is bla, bla  (!), may, when wearing another hat, assert that highest end Villa's have not sold so well in recent times here which may have some truth to it.  But this is very likely because Thailand was not under a democratic government since 2015 and we know for a fact that very large capital amounts shy away from these, but that is now past!  For example Christy's International Property Auctioneer,  more or less told me not long ago they won't list properties in such non-democratic governments -as its "too complicated".  All in all I stand to my acclaim that PPS at its current price of 0.80 is likely very undervalued and so remain with my very strong buy opinion.
Paul A. Renaud.