Central Pattana: Resilient core, share buyback to lift sentiment
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CPN’s 2Q25 net profit eased 5% y/y to THB4.3bn, weighed down by a steep 75% drop in residential revenue (4% of total) amid weak presales and transfers in a soft housing market. Excluding the residential segment, core profit grew 10% y/y and 3% q/q, underpinned by the resilience in the rental & service business (85% of total revenue).
On a q/q basis, net profit edged up 2% due to a forex gain of THB84mn in 2Q25, compared to a forex loss of THB88mn in 1Q25.
Balance sheet remains healthy, with net gearing at 63% by end-2Q25 (slightly up from the prior quarter). Total interest-bearing debt, excluding loans from related parties, stood at THB74.5bn, with 61% fixed-rate and 39% floating-rate. Cost of debt declined further to 2.80% in 2Q25.
Share buyback announced. The Board approved a THB5bn share repurchase programme for up to 111mn shares (2.47% of total) spanning 18 Aug 2025-17 Feb 2026. The buyback price will be capped at 115% of the average closing price over the past five business days prior to each repurchase date. For reference, the 30-day average price from 26 Jun-8 Aug 2025 was THB49.8.
Our view on the buyback. We see the buyback as a strong signal of management’s confidence in CPN’s long-term prospects and current valuation. In the near term, it should support share price and limit downside risk, especially as the stock dropped 9% YTD despite solid fundamentals. Over the medium term, the reduced share count should lift EPS and ROE while demonstrating that CPN has sufficient financial capacity to return capital without compromising growth plans. Given stable operating cash flow and moderate leverage, the programme also enhances capital efficiency.
While growth in 2025 may be muted due to temporary weakness in the residential segment, the combination of resilient core rental operations, a strong balance sheet, and the buyback programme should help underpin investor confidence and support the stock’s valuation.
Outlook
Robust launch pipeline. On the retail front, CPN plans to open the Central Park project on 4 Sep 2025, and Central Krabi in Oct 2025. Dusit Central Park is a transformative mixed-use development in the heart of Bangkok, Thailand, currently under construction and slated for phased completion by 2025. The hotel segment was opened in Sep 2024. Situated on a 23-rai (approximately 9-acre) site at the corner of Silom and Rama IV Roads, opposite Lumpini Park, the development occupies the former site of the iconic Dusit Thani Bangkok Hotel.
More residential projects to be launched and transferred in 2H25. On the residential front, CPN plans to launch nine projects (revised down from 10 earlier) this year, four of which will be condominium and five will be landed properties. These are valued at THB15.8bn. Of the total nine projects, one was launched in 1Q25, two in 2Q25, four in 3Q25, and two in 4Q25. In terms of transfer, the company also expects more residential transfers in 2H25. These include Essent Nakhon Sawan and Nakhon Pathom Condominium projects.
Associate income to rise next year from the contribution of its residential JVs with DUSIT. CPN has entered two residential JV projects located at its Iconic Central Project. The two projects (Dusit Residences and Dusit Park Side) with a combined value of c.THB17.2bn were 80% sold. Transfers should begin in late 2025, with the bulk in 2026 and 2027. CPN holds a 30% stake, booking this as a share of profit from associates.
Forecasts trimmed by 2%; earnings growth to be muted this year before rising next year. We trim our earnings forecasts down by 2% this year and next, as we adopt more conservative assumptions on residential land sales and transfers. We now assume residential transfers to drop from THB6.2bn to THB4.0bn in 2025 (vs. THB5.5bn in earlier forecasts) and to THB4.3bn in 2026 (vs. THB6.3bn in earlier forecast). Based on our revised forecasts, we expect CPN’s core profit to ease 1% this year before rising 7% in 2026.
Net gearing likely to decline further with asset monetisation. CPN’s balance sheet is set to strengthen further in 2025. The company is expected to receive an additional THB12.9bn from CPNREIT in August 2025, following the extension of the sublease agreement at Central Rama 2 for another 10 years (mid-2025 to mid-2035). This inflow should help reduce net gearing from 0.63x at end-2Q25 to an estimated 0.46x by end-2025.
Maintain BUY with a DCF-based TP of THB70. We reiterate our BUY rating on CPN with a DCF-derived TP of THB70, implying a 33% upside from the current share price. While growth in 2025 may be muted due to the temporary weakness in the residential segment, the combination of resilient core rental operations, a strong balance sheet, and the buyback programme should help underpin investor confidence and support the stock’s valuation.
FY Dec | 2Q2024 | 1Q2025 | 2Q2025 | % chg y/y | % chg q/q |
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Revenue | 12,876 | 11,921 | 11,661 | (9.4) | (2.2) |
Cost of Goods Sold | (5,916) | (4,878) | (4,882) | (17.5) | 0.1 |
Gross Profit | 6,960 | 7,043 | 6,778 | (2.6) | (3.8) |
Other Oper. (Exp)/Inc | (2,001) | (2,044) | (1,994) | (0.3) | (2.4) |
Operating Profit | 4,959 | 4,999 | 4,784 | (3.5) | (4.3) |
Other Non Opg (Exp)/Inc | 605 | 240 | 486 | (19.6) | 102.2 |
Associates & JV Inc | 524 | 522 | 507 | (3.2) | (2.8) |
Net Interest (Exp)/Inc | (445) | (381) | (338) | 24.0 | 11.2 |
Exceptional Gain/(Loss) | 0.0 | 0.0 | 0.0 | nm | nm |
Pre-tax Profit | 5,643 | 5,381 | 5,439 | (3.6) | 1.1 |
Tax | (1,042) | (1,076) | (1,043) | 0.1 | (3.0) |
Minority Interest | (44.6) | (77.8) | (90.5) | (102.9) | 16.3 |
Net Profit | 4,556 | 4,227 | 4,305 | (5.5) | 1.9 |
Net profit bef Except. | 4,556 | 4,227 | 4,305 | (5.5) | 1.9 |
EBITDA | 8,130 | 8,012 | 8,061 | (0.9) | 0.6 |
Margins (%) |
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Gross Margins | 54.1 | 59.1 | 58.1 |
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Opg Profit Margins | 38.5 | 41.9 | 41.0 |
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Net Profit Margins | 35.4 | 35.5 | 36.9 |
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