Central Pattana (CPN) is postponing the opening of its first store in Malaysia to the second quarter of 2017 as more studies on the business, market, cultural environment, and consumer spending, tastes and preferences are needed, even though it does not l
Meanwhile, CPN is shunning investment in China’s property sector as surging prices make potential returns unattractive.
Based on good second-quarter performance, CPN expects 15-per-cent revenue growth this year, especially after implementing effective cost-control measures.
Naparat Sriwanvit, CPN’s chief financial officer and executive vice president for finance, accounting and risk management, said that after eventually opening a branch in Malaysia, the company planned to open stores in Vietnam and Indonesia, where the market environments are quite similar to Thailand’s.
CPN seeks local partners when it expands overseas.
Domestically, CPN plans to add three to five more branches next year and hopes to have 1.6 million square metres of lease space by 2017. This would require an average investment of Bt15 billion to Bt16 billion a year.
Funding sources will be cash flow, sale of assets and loans. CPN currently has a low debt-to-equity (D/E) ratio of 0.37 per cent, below the company’s maximum 1.0 level.
CPN plans to issue about Bt1.5 billion to Bt2 billion worth of five-year debentures this year to fund its investment projects. However, CPN has no plan to sell more assets in the second half to raise investment funds. In the future, it might liquidate a hotel and/or convert the existing real estate investment trust, or establish a new REIT.
CPN hopes to achieve 15-per-cent revenue growth this year, especially after it managed 17-per-cent year-on-year growth in the second quarter despite the impact of the political unrest and the curfew, which forced early closures of some stores. Cost-control measures helped boost net profits by 29 per cent over the same period of last year.
CPN currently operates 25 department stores, seven for-lease offices, two hotels and two for-lease residential sites.
The breakdown of CPN’s lease-space sources of revenue is department stores at 89 per cent, offices 2 per cent, hotels 4 per cent, food services 4 per cent, management fees 2 per cent, and others 6 per cent.
The new branch in Salaya has been well received, with 87 per cent of the available lease space occupied, higher than targeted.