Singha to cut presale, revenue targets

Singha to cut presale, revenue targets

Singha Estate's office tower on Vibhavadi Rangsit Road in Chatuchak district is to be completed next year.
Singha Estate's office tower on Vibhavadi Rangsit Road in Chatuchak district is to be completed next year.

SET-listed property firm Singha Estate Plc is preparing to slash presale and revenue targets for residential development by 40% if the coronavirus crisis lasts until the end of the year.

The company estimates presales and revenue from residential business at 6.4 billion and 9.6 billion baht, respectively, 20% lower than the target of 8 billion and 12 billion baht set earlier in January.

"We have no idea when this crisis will end," said chief executive Naris Cheyklin. "The impact on the economy this time will be more severe than the 1997 financial crisis, hobbling purchasing power."

In the worst-case scenario, if the crisis lasts for nine more months, presales and revenue from residential development will fall to 4.8 billion and 7.2 billion baht, respectively, or 40% lower.

The impact on hotels owned and operated by S Hotels and Resorts Plc (SHR), one of the firm's subsidiaries, was already felt this month, with average occupancy falling to 50% from 80% in the first two months of 2020.

SHR's hospitality portfolio includes 39 hotels with 4,647 rooms in five countries: 29 in Britain, four in Thailand, three in the Maldives, two in Fiji and one in Mauritius.

Chairath Sivapornpan, SHR's chief financial officer, said a major blow to revenue came from cancellations worth 50-100 million baht between February and March.

Some 46% of the impact was attributed to the Maldives properties, mainly from Outrigger Konotta Maldives, and 50% to Thai properties.

"The cancellations mostly came from China, Russia and Asia," Mr Chairath said. "To mitigate the result, we persuaded customers to postpone bookings until the fourth quarter or early next year, and this helped us maintain 50% of those requesting cancellation.

"We are worried about the slowing pace of bookings from March onward. April and May will be challenging months."

Mr Chairath said SHR has diversified its guest portfolio since 2016 to be less reliant on any single nationality. The percentage of Chinese tourists has decreased from 12% in 2016 to 6% in 2019.

"We hope for a recovery in the fourth quarter," Mr Naris said. "We are now in an economical mode, cutting expenses as hotel and residential business is impacted. Marketing budget, executive welfare and board remuneration will be cut off for three months from April to June."

The office sector has faced minimal impact from the virus crisis because contracts are long-term.

But the work-from-home trend is a challenge to office landlords if it becomes the new norm.

Mr Naris said demand for office space may be smaller in size, but monthly rent per square metre for a smaller size is higher than that for a larger size.

"If the crisis ends this year, the impact in 2021 will be minimal," he said.

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