LPN Development to increase home prices

The real-estate firm's gross margin will drop from an average 34 per cent last year to 30 per cent this year. But its sales, general and administrative expenses will fall nearly 4 per cent, due to the government's policy of reducing the special business tax from 3.3 per cent to 0.01 per cent and the transfer tax from 2 per cent to 0.01 per cent.

Managing director Opas Sripayak said the company was forced to increase the prices of residential projects launched in the first quarter 3-5 per cent, depending on location and market demand.

"We cannot absorb our rising construction costs, which are now increasing 3-5 per cent even though we have existing contracts with our constructors," he said.

He said the company had to adjust contract conditions for its constructors, in order to help them survive high construction costs.

"If we did not help them adjust construction costs, they could abandon construction work from not being able to absorb them," he said.

Even though the company has increased prices for its residential projects, it recorded Bt2.8 billion in presales in the first four months of the year, up nearly 20 per cent year on year. As a result, the company believes its presales will reach this year's target of Bt11 billion.

LPN Development estimates revenue will also reach its target of Bt7.8 billion, up 14.71 per cent from Bt6.8 billion in last year.

This year, the company reported first-quarter revenue of Bt1.3 billion for a net profit of Bt204.3 million.

Opas said the company planned to launch four new condominium projects worth nearly Bt8 billion in the second half of the year. They will be located in Rangsit, the Pak Nam area of Samut Prakan province and Bangkok's Rama II Road and priced at Bt1 million to Bt2.5 million per unit.

This week, three brokers - SCB Securities, Thanachart Securities and UOB Kay Hian Securities (Thailand) - recommended "buy" for LPN Development shares, with target prices ranging between Bt9.60 and Bt12 apiece, because they believed LPN's sales growth would reach its target.

LPN closed at Bt7.30 yesterday, up 10 satang from Thursday.