SET-listed L.P.N. Development aims to generate revenue of 4.5-5 billion baht from its condo inventory totalling 11 billion baht by offering discounts, as the carrying cost of inventory is 4% per year, says the new top executive.
Chief executive Apichart Kasemkulsiri said the key reason the company is focused on clearing inventory this year is to rebalance stakeholders' wealth.
"LPN's share price was 11 baht per share in 2018 when I joined the company as a director. It is now 3.74 baht, but the book value is 8 baht," he said.
"We aim to increase it to 5 baht per share by generating as much cash as possible."
As of the end of 2023, LPN had condo inventory totalling 11 billion baht, comprising around 5,000 units ready to move in, capable of generating revenue upon sale.
The largest portion of unsold units is in two projects in Cha-am, Phetchaburi, completed in 2018, with 330 units remaining unsold out of 660 total units.
The oldest property is Lumpini Place Udon-Posri, completed in 2014, which had 55 units remaining unsold.
Apichart: Clearing inventory is key
"We will attempt to convert as much of this inventory into cash as possible, whether by offering promotions or discounts, though the gross profit margin may be lower," said Mr Apichart, a former chief financial officer who was promoted to chief executive on Feb 1, 2024.
Last year the gross profit margin was 22.4%, up from 22.1% in 2022, but the net profit margin dropped from 5.9% to 4.7%, the lowest in its history.
The company plans to earn a gross profit margin of at least 20% this year, while net profit margin may remain flat or decline, he said.
Mr Apichart said LPN has room to discount unit prices in its condo inventory as the carrying cost is 4% per year.
Despite challenges in the property market this year, LPN wants to maintain its financial discipline, he said.
LPN's debt-to-equity ratio, which was 1:1, has risen to 1.22 times as of the end of 2023 because of declining performance.
Over the past five years, the company's net profit declined from 1.25 billion baht in 2019 to 353 million last year. Presales declined by 9% from 10.9 billion baht in 2022 to 9.9 billion in 2023.
Revenue dropped by 28% from 10.3 billion baht in 2022 to 7.44 billion last year, attributed to residential development, which dipped by 39% to 5.1 billion baht.
Mr Apichart said LPN plans to spin off its property management firm, LPP Property Management Co, to list on the Market for Alternative Investment this year as LPP's performance was outstanding.
Last year LPP generated 1.56 billion baht in revenue with a net profit of 139 million baht, accounting for 40% of LPN's net profit.
This year LPN plans to launch six new projects worth a combined 6.52 billion baht, aiming for 11 billion in presales and 10% growth in both revenue and net profit.
The new projects comprise one condo project in the Wutthakat area worth 980 million baht and five low-rise housing projects worth 5.54 billion baht in Krungthep Kreetha, Sukhumvit Soi 77, Nakhon Pathom and the Ratchaphruek areas.
"The property sector is no longer a sunrise business. It can be described as a giant fish eating large, medium and small fish," he said.
"As a mid-sized fish, we need to rebalance and cash in as much as possible."