Property Perfect eyes 10% profit margin

Property Perfect eyes 10% profit margin

Building materials will be bought in bulk

An artist’s conception of the Bella Costa in Prachuap Khiri Khan’s Pran Buri district, projected to be worth 1.7 billion baht, with 323  units sized 45 square metres and priced at 3.15 million.
An artist’s conception of the Bella Costa in Prachuap Khiri Khan’s Pran Buri district, projected to be worth 1.7 billion baht, with 323 units sized 45 square metres and priced at 3.15 million.

SET-listed developer Property Perfect Plc (PF) hopes to raise its profit margin to 10% this year from 4% last year and targets 18 billion baht in revenue by year-end.

Chief executive Chainid Adhyanasakul said his company would focus on trying to improve profit margin through five strategies including buying construction materials in bulk to save an estimated 200 million baht.

Property Perfect owns a land bank of 2,000 rai in Greater Bangkok it bought decades ago for new development projects.

Mr Chainid attributed last year’s low profit margin to the low gross margin for condos, which stood at 27.5%, down from a projection of at least 30%. The market was unfavourable last year, and there were higher construction costs.

It plans to launch 24 new residential projects this year worth a combined 29.5 billion baht, with target presales and revenue of 18 billion baht each.

He said existing plots are expected to cover new projects for the next three years, meaning the company will spend only 2 billion baht a year to buy new plots from 2015-17.

The company's land bank includes a 400-rai site on Rattanathibet Road near the Purple Line subway, a 700-rai plot adjacent to the University of the Thai Chamber of Commerce's Chaeng Watthana campus and 1,000 rai near the Orange and Pink mass-transit lines.

This year it hopes to improve its gross margin for condo revenue to 34% and boost overall revenue to 18 billion baht from 12.5 billion last year. A contributor could be Kiroro Resort on Japan's Hokkaido island, which is expected to make a profit this year after a loss in 2014, as Property Perfect will team up with a low-cost airline opening a Bangkok-Hokkaido route in May to do marketing promotions for the resort.

Mr Chainid said the company would put the Kiroro Resort, the Westin Grande Sukhumvit and the Sheraton Hua Hin, worth a combined 2.4 billion baht, into a real estate investment trust next year.

The two Thai hotels are owned by SET-listed Grande Asset Hotels and Property Plc (GRAND), in which Thai Property Plc (TProp) has the majority stake.

Last June, Property Perfect said it would buy all the shares in TProp. Following completion of the tender offer, Property Perfect is required to launch a tender offer for the remaining shares in Grande Asset. TProp now owns more than 40% of Grande Asset. Property Perfect plans to swap 1.149123 of its shares for each share in Grande Asset.  

After the acquisitions, Property Perfect's assets will increase to 45.2 billion baht from 30.7 billion, while revenue is estimated to hit 20 billion.

TProp has two office buildings for rent — One Pacific Place and Two Pacific Place, both on Sukhumvit Road and both managed by Pacific Estate Development Ltd, a subsidiary of TProp.

Grande Asset owns the Sheraton Hua Hin Pranburi Villas and the Hyde Sukhumvit condo in addition to the two hotels listed earlier.

Property Perfect's board yesterday agreed to a cash payment using cash in hand, bank loans and a rights offering at three existing shares to one new share at a price of one baht apiece.

PF shares closed yesterday on the SET at 1.27 baht, down two satang, in trade worth 46.3 million baht.

GRAND closed at 1.98 baht, up one satang, in trade worth 11.1 million baht.

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