Hemaraj seeks rebound with utilities, non-automotive

Hemaraj seeks rebound with utilities, non-automotive

Hemaraj Land and Development Plc (HEMRAJ), a leading industrial estate developer, expects better performance this year with a focus on utilities and the non-automotive sector.

President and chief executive David Nardone said the company's performance last year fell short of expectations because the Board of Investment failed to grant investment privileges at a time when the country's economy was ailing.

He said continued growth in non-automotive categories such as consumer goods, electronics and petrochemicals should offset falling output in heavy industry and warehousing.

"We see the non-automotive business capitalising on a bigger market with the rising population in Asia-Pacific, with Thailand remaining the company production base to provide for the growing market," Mr Nardone said.

Last year, the non-automotive sector accounted for 75% of total income at Hemaraj's industrial estates. The company expects the proportion to be at least 50% this year.

Hemaraj reported 8.23 billion baht in revenue in 2014, down from 12.1 billion in 2013. Its net profit was 2.96 billion baht, down from 4.33 billion.

Hemaraj expects revenue to grow slightly in 2015 as the company focuses on recurring income from utilities.

"That will help provide us with a steadier source of income and with less exposure to economic volatility," Mr Nardone said.

Hemaraj projects sales of 1,400 rai at industrial estates this year, compared with 665 rai in 2014. The company sold 186 rai in the first quarter. Sales are expected to increase in the coming months.

Hemaraj recently signed shareholder agreements for seven SPP (small power producer) projects with a 25.01% stake in each project. The projects are expected to generate 883 megawatts and start up as early as 2016.

The company also plans to sell non-core assets, such as the UM Tower and 253 rai of land on Koh Lan near Pattaya, to Hemaraj's real estate investment trust (REIT) this year.

WHA Corporation Plc, a warehouse developer, recently acquired Hemaraj in a bid to bolster its presence in the industrial estate sector.

"The merger allows the company to achieve economies of scale that will reduce operating and production costs," said Somyos Anantaprayoon, chairman of Hemaraj and chief executive of WHA.

A plan to delist Hemaraj from the Stock Exchange of Thailand is still under consideration, but it could take a long time to gain approval from the Securities and Exchange Commission and shareholders of WHA and Hemaraj.

"More important is the synergy effect from the merger that will allow us to answer the needs of our customers," Mr Somyos said.

Moreover, a merger offers solutions for customers if the company expands its business into neighbouring countries.

Shares of HEMRAJ closed yesterday on the SET at 4.32 baht, unchanged, in trade worth 25.2 million baht.

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