Advance bookings boost prospects for Pre-Built

With higher cash advance payments for construction, the SET-listed contractor Pre-Built Plc (PREB) has stepped up property development, planning to launch four projects worth a combined 3.5 billion baht next year.

Chief executive Chaiyarat Thampeera said contractors have been in demand amid the condominium boom of recent years due to the large number of construction jobs and limited number of contractors.

Several property owners have booked contractors in advance, foreseeing problems with contractor scarcity soon.

"The property owners are running to us asking us to take the construction jobs in contrast with the past when it was us running to them," Mr Chaiyarat said.

"We're being offered higher cash advances of 10-20% of the construction job price, so our capability for property investment increases."

With higher cash on hand, Pre-Built has been better able to pay its debts and reduce its financial burden.

It also has cash to pay for construction materials at discounted prices.

Moreover, it has cash to expand its property development business, which is run by the Built Land Co subsidiary that it founded in 2009.

This year, the subsidiary paid 300 million baht for two plots of one rai and five rai near a mass-transit extension line, where it plans to launch two condo projects worth a combined 2.5 billion baht in 2013.

The subsidiary also plans to buy two new plots for low-rise housing projects with a sales value of 500 million baht each to realise revenue next year.

"Built Land will be registered as a listed firm next year," Mr Chaiyarat said.

"An initial public offering will be in 2014."

The subsidiary has registered capital of 200 million baht, which will rise when it raises funds in the stock market.

In the coming years, it will post higher net profit than the parent's construction business.

During the first nine months of this year, Pre-Built reported consolidated revenue of 3.03 billion baht.

Some 2.47 billion was from construction, up from 2.1 billion in the same period last year, while 381 million was from property development, up from 150 million.

Pre-Built plans to achieve 4 billion baht in consolidated revenue this year, up by 28% from last year.

It has also revised up next year's revenue growth target to 25% from 18% due to a rush of construction jobs.

In the fourth quarter, Pre-Built expects to secure half these construction jobs, which have a total value of 6 billion baht.

At the end of the third quarter, the firm had a backlog of 5.8 billion baht, of which 3.9 billion will be booked in 2013.

Pre-Built has two other subsidiaries _ the precast pieces maker PCM Construction Materials Co Ltd and the property manager and agent Built Heart Co Ltd.

Shares of PREB closed yesterday on the Stock Exchange of Thailand at 8.95 baht, up 25 satang, in trade worth 18.6 million baht.

About the author

Writer: Kanana Katharangsiporn
Position: Business Reporter