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AGRIBUSINESS, PROPERTY & CONSTRUCTION
Two-digit returns possible this year Politics will affect buyer sentiment By KANANA KATHARANGSIPORN Political problems have impeded the growth of the property market in the first quarter of this year -- and there are concerns they could last. However, the one-year total shareholder return (TSR) for the property sector this year is still expected to go into double-digits.  ``The presales of housing units made during late 2005 and early 2006 will be booked within this year which will favourably increase developers' returns,'' said Terdsak Thaweeteeratham, a property analyst at ABN Amro Asia Securities.``Meanwhile, the current share prices of many listed developers are now below their own fundamentals.'' The property sector's one-year TSR in 2005 was 8.2%, higher than -25% in 2004. But the sector ranked 15th in terms of one-year TSR among the 27 sectors of the Stock Exchange of Thailand. According to Mr Terdsak, reports of a 10% increase in the number of housing registrations showed there was room for market growth. However, larger and listed developers may prove better at competing in the future. Listed developers made up 45% of the market in 2005, up from 38% in 2004, which showed an improved performance for the sector, he claimed. The sector, which had a market capitalisation of 293.66 billion baht, showed a high five-year TSR of 51.2%, followed by a three-year TSR of 30.5%. The 10-year return was negative, at -6.2%, reflecting the effects of the 1997 market crash. ``We should consider the three-year and five-year returns, as the property sector only picked up in 2000 to 2001,'' Mr Terdsak said. ``The one-year return was not so good, as consumers were worried about interest rates during the second half of 2004 and into 2005, which pulled down the P/E ratio to four to five times from the normal eight times.'' The best performer last year was the commercial and retail specialist Central Pattana Plc (CPN), with a market capitalisation of 31.375 billion baht, posting a one-year TSR of 76.4%. Ticon Industrial Connection (TICON) was ranked second with 67.2%, followed by Amata Corporation Plc (AMATA), with 59.8%. EMC Plc was the worst performer in the sector in terms of one-year TSR last year with -68.1%, followed by Nawarat Patanakarn Plc (NWR) with -59.9%, which was one of the three lowest in 2004, and NC Housing Plc (NCH) with -54.3%. Mr Terdsak said CPN's performance could be attributed to the establishment of a property fund worth over 10 billion baht, which was booked in its financial statements last year. NWR and EMC, he said, saw revenue losses, while NCH saw a slowdown in housing sales last year which was reflected in its share price. Anuphong Asavabhokin, chief executive officer of Asian Property Development Plc (AP), which posted a one-year return of -1.5% last year, said that the property sector did not perform well last year because the economy was affected by the previous year's tsunami, rises in oil prices and interest rates, and a downturn in consumer confidence. All affected buyer sentiment. ``Overseas investors were not confident in the sector due to continuously rising interest rates,'' he said. ``Meanwhile, the share prices of some listed [developers] were not steady and did not gain attention from overseas investors.'' Mr Anuphong said the market picked up during the second half of 2005, although less property was transferred than had been proposed within the year. Then in late 2005, political conflict started affecting consumer confidence. ``Excepting political problems, everything is good. Inflation is not so bad and the price of oil has steadied. Banks are stricter about lending and unprofessional developers are gone,'' commented Mr Anuphong. `` But the problem is that consumers are not confident, which is reflected in housing sales. If it [the political problem] ends soon, the property market will be better than last year. Otherwise, it will affect the overall economy, not only the property sector.''
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