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Developers expect growth to continue

Many report good performance in first nine months, expect continued boost at 10-20%

Most listed property firms showed renewed growth in revenue and earnings in the first nine months of this year and now they are looking for the strong trend to continue at 10-20 per cent this quarter compared with the third quarter.

“Demand for residences recovered in the third quarter. That boosted our presales and revenue over the estimate, so we have confidence the market will still maintain growth in the fourth quarter to drive our revenue and profit to achieve this year’s target,” said Thongma Vijitpongpun, president and chief executive of Pruksa Real Estate, a leading residential developer.

Pruksa saw its net profit soar by 34.9 per cent to Bt4.7 billion and revenue by 21 per cent to Bt30.37 billion in the first nine months from the same period last year. Its net profit margin was 15 per cent.

Growth was more modest at Land & Houses – 6.1 per cent in net profit to Bt5.2 billion and 6.8 per cent in revenue to Bt20.53 billion in the same period – but its net profit margin was 25 per cent, well above the industry’s average of 14-16 per cent.

At AP (Thailand), net profit rose by 100 per cent to Bt2 billion and revenue by 47.3 per cent to Bt17.41 billion. Revenue jumped because there were condominium projects ready to be transferred to customers in the third quarter and earnings doubled because the company successfully cut marketing and management costs by 20.3 per cent in the third quarter from the same quarter of last year.

Net profit at Supalai exploded 163 per cent to Bt2.9 billion as revenue jumped 96 per cent to Bt11.77 billion.

The company reported to the Stock Exchange of Thailand that it had enough condos completed and transferred to its customers in the third quarter that they made up 70 per cent of its revenue in that quarter.

Its marketing and management costs as a percentage of sales were reduced from 17 per cent to only 10 per cent.

However, some listed developers experienced a drop in the first nine months when transfers of their residential units were delayed to their customers.

LPN Development witnessed declines of 28.2 per cent to Bt1.27 billion in net profit and 16.5 per cent to Bt8.54 billion in revenue.

Prinsiri informed the exchange that its third-quarter sales were lower than estimate, so nine-month net profit plummeted 73 per cent to Bt47 million and nine-month revenue 11.7 per cent to Bt1.5 billion.

Earnings were also squeezed by a surge in construction, marketing and management expenses after the launch of residential projects.

“We delayed launching new condominium projects early this year, while some of our condo units could not be transferred to our customers on time. However, we have continued to maintain our revenue target for this year,” managing director Opas Sripayak said.

Q4 still booming

Pruksa’s Thongma said the residential market had continued to maintain growth of 10-20 per cent in the fourth quarter from the third quarter as purchasing power would be fuelled by the government’s stimulus package when it goes into effect and injects money into the economy.

Demand for residences priced in the range of Bt1 million to Bt5 million – both in low-rise projects, such as detached homes and townhouses, and condo projects – is still robust.

“In the first half, the residential market collapsed 20 per cent but in the third quarter the market rebounded and the fourth quarter also has signs of recovering better than the third quarter.

“This will help the whole year tumble only 10 per cent. This is better than the forecast from early this year,” he said.

Credit: The Nation

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