In spite of a drop in year-on-year operating profit, net profit in the fourth quarter of 2006 rose 4 per cent year on year to Bt1.28 billion owing to strong equity income.

That soared eight times year on year and six times quarter on quarter to Bt634 million after the company's 50-per-cent-owned LH Property Fund booked a gain of Bt624 million from the sale of Wave Place to QH Property Fund.

Gross margins narrowed further to 29.1 per cent from 30.7 per cent in the third quarter after a 6-per-cent discount during a two-day special promotion and higher contributions from some low-margin town-house projects.

For the full year, earnings dropped 37 per cent to Bt3.25 billion. Sales performance recovered strongly with pre-sales rising 33 per cent quarter on quarter to Bt5.21 billion in the fourth quarter while booked revenue jumped 64 per cent quarter on quarter to Bt5.83 billion. This was driven by the two-day special campaign in October and more television advertising.

Town houses contributed around 5 per cent of total revenue in the fourth quarter.

Land & Houses' market share in the single-detached-house segment rose to 13.9 per cent in the 11 months of 2006 from 12.9 per cent in the third quarter of 2006.

The developer now has a pre-sales backlog worth Bt1 billion carried over from 2006 to be recognised this year.

Since margins will remain weak from higher competition in the residential market, Kim Eng revised down its gross-margin assumption for 2007 to 30 per cent. The net-profit forecast has been reduced to Bt3.26 billion - earnings per share of Bt0.38 - implying no growth from last year.

After an interim dividend of Bt0.17 per share, the broker expects another Bt0.14 dividend for second-half operations.

Gearing fell to 0.69 times from 0.74 times last quarter with relatively stable borrowings of Bt15.55 billion.

The company generated strong operating cash flow of Bt2.31 billion following a sizeable housing transfer and a decline in working capital.

Land & Houses will inject around Bt300 million into LH Bank this year and around Bt700 million into LH Property.