Amata Corp: Awaiting clarity on the US’s reciprocal tariffs
- 1Q25 results beat our and consensus estimates; net profit surged 79% y/y on strong land transfer and higher share of profit from assets
- Potentially muted land sales in 1H25 as investors adopt a wait-and-see approach
- Expect land sales and transfers to pick up in 2H25 after greater clarity on US reciprocal tariff developments
- A 44% upside to our TP of THB22.8 still on offer
1Q25 net profit surged 79% y/y to THB829mn. Growth mainly came from strong land transfers and higher share of profit from associates. In 1Q25. Revenue from industrial land sales made up 57% of total revenue in 1Q25.
On a q/q basis, net profit dropped 19% due to the 60% drop in revenue from land transfer. Note that 4Q has always been the high season for land sales and transfer.
Blended gross margin widened to 43.8% in 1Q25, up from 36.4% in 1Q24 and 33.0% in 4Q24. This was due to a change in revenue mix – i.e. rising contribution from industrial land sales, which carry much higher gross margins compared to utilities revenue.
Balance sheet remains strong. Net gearing inched up slightly to 55% at end-1Q25 from 41.2% at end-2024, as AMATA borrowed more to fund its expansion
Outlook
High US reciprocal tariffs affect AMATA's key markets. On 2 April 2025, the US announced a broad wave of reciprocal tariffs ranging from 10-50% on its trading partners. Among the hardest hit were Thailand (36%), Vietnam (46%), and Laos (48%) – AMATA’s core markets. These rates are notably higher than those faced by other regional peers, potentially undermining export competitiveness and dampening near-term investor sentiment.
90-day tariff pause provides temporary reprieve for most countries. In a follow-up announcement on 9 April 2025, the US President Trump introduced a 90-day suspension of these tariffs for over 70 countries – excluding China – to allow time for negotiations aimed at correcting trade imbalances. However, key sectors such as autos, auto parts, steel, and aluminium are excluded from this pause and remain subject to elevated tariffs, highlighting national security concerns.
US-China reaching a 90-day truce. In May 2025, the US and China reached a 90-day truce to de-escalate their ongoing trade tensions, agreeing to significantly reduce tariffs on each other's goods – the US tariffs on Chinese imports dropped from 145% to 30%, while China's tariffs on the US’s goods were cut from 125% to 10%. The deal includes a framework for continued negotiations aimed at resolving structural issues and discussions on curbing the export of fentanyl precursors from China to the US. The announcement sparked a major rally in global financial markets, but the risk of renewed conflict remains.
Will FDIs be redirected to other countries with lower US reciprocal tariffs? While the US reciprocal tariffs could certainly influence FDI decisions, the extent of the impact will depend on the outcome of negotiations and how tariffs evolve over time. If Thailand’s final tariff rate aligns with regional norms, it should remain competitive in attracting FDIs. However, investors are also likely to consider a combination of factors, including strategic locations, industry-specific dynamics, trade agreements, and government incentives, which may mitigate the impact of tariff increases.
However, FDIs into ASEAN in general could slow in the near term. While final tariff rates are still uncertain, there is a growing concern that FDIs into ASEAN could experience a slowdown in the near term. Uncertainty surrounding the US reciprocal tariffs and their impact on trade flows may cause investor hesitancy, delaying or reducing investment. We therefore expect muted land sales for AMATA in 1H25.
Huge backlog of THB21.5bn at end-1Q25. Of the total, THB19.7bn was derived from land sales in Thailand, and THB1.8bn from land sales in Vietnam. These should ensure revenue stream this year and next.
Can clients walk away from contracts? With investors having paid on average c 50% of total sales value, contract cancellations are unlikely. This suggests revenue and earnings should continue to grow, at least in 2025.
Our land sales assumptions. We are now assuming land sales will drop to 1,000 rai this year and 1,200 rai next year, vs. its peak of 3,018 rai sold in 2024. Note that management still maintains its 3,500 rai land sales target for this year, pending more clarity on the US tariffs.
Earnings to continue hitting new highs this year before easing next year. We expect AMATA’s core earnings to grow 5% this year before easing 23% next year.
Recommendation
Maintain BUY with a TP of THB22.80. Our TP is based on a 10x 2025 PE and a 40% discount-to-RNAV of THB37.9, as we factored in a more conservative land sales assumption and a deeper discount-to-RNAV to reflect investors’ wait-and-see approach amidst tariff uncertainties. The stock still offers a decent 44% upside to our TP. We, therefore, maintain BUY on AMATA, acknowledging near-term risks while recognising its long-term value proposition.
Quarterly / Interim Income Statement (THBmn)
FY Dec | 1Q2024 | 4Q2024 | 1Q2025 | % chg y/y | % chg q/q |
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Revenue | 2,701 | 5,800 | 3,329 | 23.2 | (42.6) |
Cost of Goods Sold | (1,717) | (3,884) | (1,873) | 9.1 | (51.8) |
Gross Profit | 984 | 1,916 | 1,457 | 48.0 | (24.0) |
Other Oper. (Exp)/Inc | (312) | (339) | (441) | 41.4 | 29.9 |
Operating Profit | 673 | 1,577 | 1,016 | 51.0 | (35.6) |
Other Non Opg (Exp)/Inc | 41.7 | (16.0) | 61.1 | 46.6 | (481.1) |
Associates & JV Inc | 157 | 142 | 230 | 46.5 | 61.9 |
Net Interest (Exp)/Inc | (175) | (202) | (169) | 3.3 | 16.1 |
Exceptional Gain/(Loss) | 77.9 | 123 | (15.9) | nm | (113.0) |
Pre-tax Profit | 774 | 1,624 | 1,121 | 44.9 | (30.9) |
Tax | (141) | (10.3) | (186) | 32.3 | 1,705.6 |
Minority Interest | (170) | (591) | (106) | 37.5 | (82.0) |
Net Profit | 464 | 1,023 | 829 | 78.9 | (18.9) |
Net profit bef Except. | 386 | 900 | 845 | 119.1 | (6.1) |
EBITDA | 981 | 1,818 | 1,414 | 44.2 | (22.2) |
Margins (%) |
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Gross Margins | 36.4 | 33.0 | 43.8 |
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Opg Profit Margins | 24.9 | 27.2 | 30.5 |
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Net Profit Margins | 17.2 | 17.6 | 24.9 |
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Source: DBSVTH, Company
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