Developer to raise Bt5.7 bn via bond issue, fund launch
Developer aims to boost revenue 67%
Property Perfect plans to raise Bt5.07 billion this year by issuing debentures and launching a property fund to support revenue growth of 67 per cent or Bt15 billion compared with Bt9 billion last year.
"We can reduce our interest cost from 5.5 per cent to 5 per cent this year by issuing deben-
tures worth Bt4 billion," chief executive officer Chainid Ngow-Sirimanee told a press conference yesterday.
Half of the debentures or Bt2 billion will be sold in the first half and the rest in the second half. The company targets an interest rate of not over 5 per cent, which would maintain its debt-to-equity ratio at not over 1.5 times at year-end, down from 1.7 now.
The Bt1.07-billion property fund will rely on rental income from the company's two dormitory projects in Salaya of Nakhon Pathom and in Chiang Mai.
This year, 21 residential projects worth Bt27.55 billion will be in introduced near existing and planned mass-transit routes to help boost presales to Bt19 billion and revenue to Bt15 billion, of which 64 per cent will come from detached housing and townhouse projects and 36 per cent from condominiums.
The company is going for aggressive growth this year after its revenue of Bt9 billion missed the target last year of Bt12 billion because of the labour shortage, which prevented the company from delivering its condos to its customers on time.
"We have condos, which were delayed from last year, worth Bt3 billion to transfer to our customers in the first half of this year," Chainid said.
Through cost management, the firm believes that it can show a net profit margin this year of 10-11 per cent, which would approach the average of 13-14 per cent of other listed property firms.
It will cut advertising costs from 4 per cent of sales to only 3 per cent. It will also reduce construction costs by using prefabricated modules to build 70 per cent of its projects, up from 50 per cent last year.
The company also downsized its budget to buy land from Bt3 billion to Bt2 billion.
All of this including lower interest costs is expected to reduce its total costs by 1-2 per cent.
Of the 21 new residential projects this year, 15 worth Bt18.35 billion will be low-rises in areas around new mass-transit routes such as Rattanathibet, Sukhumvit Soi 77, Ratchaphruek, Chaeng Watthana, Bang Yai, Pattanakarn, Bang Bua Thong, Bang Na and Phetkasem. Six projects will be condominiums worth Bt9.2 billion in Prachachuen, Rattanathibet, Phetkasem, Bang Na, Salaya and Hua Hin.
The company has land to develop all 21 residential projects this year. This is part of its land bank of 2,200 rai (352 hectares) in Greater Bangkok, which are close to both existing and new mass-transit routes. There is enough land to develop residential projects until 2015.
"As a result we can reduce our budget to buy land from an average of Bt3 billion a year to Bt2 billion this year," Chainid said.
The company is confident that its presales will achieve the target of Bt19 billion when it sees growing demand in both Bangkok and the suburbs, especially in new locations with mass transit under the government's policy to build a rail system around the metropolis.
The provinces also show potential for growth.
Many property firms have gone upcountry to serve demand from investors expanding in Thailand before the ASEAN Economic Community blooms in 2015.
"We believe that the property market still has stable growth of 5-10 per cent a year by not having bubbles, although some locations may have more supply than demand," Chainid said.