Citi Research downgraded Supalai Pcl to ‘neutral’ from ‘buy’ and cut the stock’s target price to 19.2 baht from 21.7 baht, reflecting earnings downgrade due to slower low-rise housing sales and a risk of construction delays.
Supalai shares were up 0.5 percent at 19.6 baht, with a year-to-date gain of 10.7 percent, underperforming a 24 percent rise of the broader property subindex.
The broker said Supalai could face construction delays and rising competition in the provincial markets, which could lead to slower take-up of new projects. It cut Supalai’s 2013 earnings forecast by 16.8 percent.
“Labour shortages could become more acute in 2013 as more government infrastructure projects are implemented. The risk of construction delays for Supalai is high because it primarily relies on conventional construction methods even as its peers gradually move to a pre-cast system,” the broker said.
Reporting by Viparat Jantraprap; Editing by Jijo Jacob