CMC resets revenue target, rejigs plans

Chaopraya Mahanakorn chief Wichian Padhayanun says the company has slashed revenue target from Bt1.2 billion to Bt1 billion.

Taking into account the uncertain political climate and declining interest from home-buyers, developer Chaopraya Mahanakorn Plc (CMC) has reworked its business plan and reduced its revenue target for this year from Bt1.2 billion to Bt1 billion.

"We have adjusted our revenue target because there has been a significant drop in purchasing power in the market due to the country's political turmoil and slower economic growth. Hence, we have realigned our revenue projections to match the actual demand in the market," CMC chief executive Wichian Padhayanun said.

The company has also pushed back plans to list on the Stock Exchange of Thailand from the second quarter to the fourth quarter. "The delay in raising funds from the capital market will not have much of an impact on our business plan for this year as we had already set back the dates for launching projects from the first half to the second half," Wichian said.

CMC had planned to increase its registered capital from Bt750 million to Bt1 billion by issuing 250 million shares in the second quarter.

The issue of fresh shares will dilute the Padhayanun family's stake in CMC from 100 per cent to 75 per cent. The family founded the group in 1994.

The company plans to spend the funds generated by the share issue to buy land for residential projects. With the delay in the share issue, the land acquisition has also been pushed to next year, Wichian said.

At present, the company is developing seven residential projects worth about Bt10 billion. Four of them are condominium projects while the others are detached houses. The condominium projects are the Bangkok Horizon on Ramkhamhaeng Road and others under the "Chateau In Town" brand on Ratchada Soi 13, Ratchada Soi 17 and Ratchayothin Road. The detached-housing projects - The Rich, Royal Regence and Casa Ureka - are in Bang Khae district.

The three projects under the "Chateau In Town" brand will be major revenue generators for the company this year. They are expected to add about Bt1 billion to the company's coffers. The company expects revenue from other projects to start trickling in between next year and 2010.

CMC estimates that pre-sales of Bt2 billion will help it earn revenue of Bt1 billion and a net profit of Bt200 million this year, up 53 per cent and 185 per cent, respectively, from last year. The company will launch seven projects worth Bt3 billion between September and October.

Four of the projects will be condominiums: two will be located on Phetkasem Road, one on Sathorn Road and another on Ratchadaphisek Road. The cumulative worth of the projects will be Bt2 billion.

The remaining projects will have detached houses. Two of the detached-housing projects will be launched on Sathorn Road and in Bang Mod district under the "Casa Ureka" brand. The third project, Baan Kinaree, will come up on Sathorn Road.

Many of the company's condominium projects had to be delayed after they faced problems obtaining Environ-mental Impact Assessment (EIA) licences. Construction on the projects had begun but CMC had to wait for the EIA approval and construction clearance before launching pre-sales.

"We do not think the delay in launching projects from the first quarter to the second quarter will affect our business in the long term as home-buyers too are putting off property investments in face of high cost of living," Wichian said.

He said the company is also waiting for raw-material costs to stabilise. "We cannot set prices now because we don't know how stable the price will be. We do not want to end up setting prices now and then bearing the burden in case costs rise beyond our calculations. We expect prices of raw materials, especially steel, to stabilise in the third quarter. That will be a good time to launch new projects," he said.