Periodic/Sector reports
Property: Sector Passes Its 1H26 Trough; Transfer Momentum Expected To Accelerate Towards Year-end
MARKET WEIGHT (Maintained)
Analyst
Analyst
Natthida Chuaysong
Highlights
Developers reported mixed but positive earnings. Key developers such as SPALI and AP reported better-than-expected results. Overall sector earnings were supported by a slight improvement in gross margins, while contributions from businesses beyond residential and condominium sales provided additional support amid low sector growth and continued gross margin pressure.
We like AP and SPALI, with the latter being our top pick for its strong financial position and low leverage. Meanwhile, earnings from its Australian JVs are expected to outperform our previous expectations, providing potential upside to the stock. In addition, SPALI remains an active developer, with an aggressive project launch plan in 2H26.
We maintain MARKET WEIGHT on the sector, with SPALI as our top pick.
Analysis
1H26 earnings were mixed but positively skewed. Property developers reported mixed earnings results, with key players such as SPALI and AP delivering better-than-expected results. Some company are seeing greater contributions from overseas operations and other businesses, rather than from the core residential and condominium development business.
In 1H26, the industry became more reliant on non-core businesses amid margin compression. Property developers faced a need to accelerate inventory clearance, putting pressure on gross margins as companies offered promotions to reduce inventories. In addition, a shift in product mix toward low-rise projects, which typically carry lower gross margins than condominium projects, further weighed on project gross margins. As a result, gross margins from property sales declined in 1Q26. Nevertheless, key players such as AP and SPALI were able to maintain relatively resilient gross margins despite a sharp decline in 1Q26.
Earnings growth is increasingly supported by non-core income rather than core operations alone. During 1H26, earnings at several property developers were supported by share of profits from associates/JVs and one off gains from asset disposals. These contributions helped offset weakness in core domestic consolidated operations, which continued to soften in line with the slowdown in the domestic property market.
Accelerated project launches in 2H26 are expected to support growth momentum. We expect an increase in new project launches in 2H26, particularly among leading property developers. Thai property developers have so far maintained relatively resilient overall operating performance, and we currently see a relatively low risk of revenue target misses. We expect increased project launches to support growth momentum.
Highlights
Developers reported mixed but positive earnings. Key developers such as SPALI and AP reported better-than-expected results. Overall sector earnings were supported by a slight improvement in gross margins, while contributions from businesses beyond residential and condominium sales provided additional support amid low sector growth and continued gross margin pressure.
We like AP and SPALI, with the latter being our top pick for its strong financial position and low leverage. Meanwhile, earnings from its Australian JVs are expected to outperform our previous expectations, providing potential upside to the stock. In addition, SPALI remains an active developer, with an aggressive project launch plan in 2H26.
We maintain MARKET WEIGHT on the sector, with SPALI as our top pick.
Analysis
1H26 earnings were mixed but positively skewed. Property developers reported mixed earnings results, with key players such as SPALI and AP delivering better-than-expected results. Some company are seeing greater contributions from overseas operations and other businesses, rather than from the core residential and condominium development business.
In 1H26, the industry became more reliant on non-core businesses amid margin compression. Property developers faced a need to accelerate inventory clearance, putting pressure on gross margins as companies offered promotions to reduce inventories. In addition, a shift in product mix toward low-rise projects, which typically carry lower gross margins than condominium projects, further weighed on project gross margins. As a result, gross margins from property sales declined in 1Q26. Nevertheless, key players such as AP and SPALI were able to maintain relatively resilient gross margins despite a sharp decline in 1Q26.
Earnings growth is increasingly supported by non-core income rather than core operations alone. During 1H26, earnings at several property developers were supported by share of profits from associates/JVs and one off gains from asset disposals. These contributions helped offset weakness in core domestic consolidated operations, which continued to soften in line with the slowdown in the domestic property market.
Accelerated project launches in 2H26 are expected to support growth momentum. We expect an increase in new project launches in 2H26, particularly among leading property developers. Thai property developers have so far maintained relatively resilient overall operating performance, and we currently see a relatively low risk of revenue target misses. We expect increased project launches to support growth momentum.
MARKET WEIGHT (Maintained)
Analyst
Analyst
Natthida Chuaysong
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