Land and Houses slashes investment

Land & Houses's senior executive vice president Naporn Soonthornchitcharoen.

Leading property firm Land and Houses plans to cut its investment in new land by about 40 per cent, from an annual average of about Bt5 billion to Bt3 billion next year, following a significant fall in demand for residential projects.

The investment in new land will come from the company's cash flow, senior executive vice president Naporn Soonthornchitcharoen said this week.

Despite the cutback, Land and Houses plans to go ahead with 12 new residential projects in 2009 with a market value of nearly Bt12 billion. These will replace existing projects that are expected to be sold out by the end of this year, Naporn said.

"We will continue to launch new residential projects in 2009, but they will be of a revised size and design, to match customer demand," he said, adding that the company expected buyers to be spending less out of fear for future earnings, which could either remain stable or decrease according to the depth of the economic slump.

He said demand for residential projects had fallen significantly since October, when homebuyers first became concerned about the twin effects of the global recession and local political uncertainty on both Thailand's economy and the level of their earnings.

"If the new government cannot solve the country's political problems, we cannot estimate what will happen to the country's economy and the property market, so we have to be very conscious of our investments and business plan next year," he said.

The company has revised downwards its sales target for 2008, from Bt21 billion to between Bt16 billion and Bt18 billion.

"We revised our sales target when we saw purchasing power dropping," Naporn said.

Earlier, Land and Houses announced revenue of Bt13.2 billion and a net profit of Bt2.6 billion in the first nine months of this year.

Looking ahead, the company expects sales of between Bt16 billion and Bt18 billion in 2009, in keeping with property market sentiment, he said.

Meanwhile, 19 stockbrokers pub¬lishing analyses of Land and Houses performance between November 10 and December 8 recommended that investors buy the company's shares at target prices ranging from Bt3.50 to Bt4.50 per share.

Trinity Securities' research department said that Land and Houses remained the leader of the property market even though its revenue in the first nine months was lower than that in the first nine months of last year. The company's net profit from the first nine months was higher than that from the corresponding period of 2007 because Land and Houses had succeeded in controlling its operational costs.

The broker said the company's finances were healthy, with a debttoequity ratio of only 0.71:1. Land and Houses will also benefit from the government's extension of tax incentives for the property sector until March 2010 because it has projects with residential units ready to transfer to customers with a cumulative value of Bt7.05 billion. As a result, Trinity rec¬ommended "buy" at a price of Bt4 per share.

Land and Houses' shares are now trading between Bt3 and Bt3.20 each.