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Quality Houses cuts growth forecast

Quality Houses Plc has revised down its business growth forecast from 10 per cent to only 5 per cent this year due to the country's prolonged political turmoil.

"We have continued to maintain growth - our presales in the first two months of this year were Bt2.3 billion, up 21 per cent from [about] Bt2 billion in the same period of last year. However, we have had to adjust our total revenue growth forecast for this year to only 5 per cent from an earlier estimate of at least 10 per cent," the company's CEO Rutt Phanijphand said.

Meanwhile, he predicted that Bangkok and the suburban property market this year will be flat or may drop from last year as the country's economy has seen slight growth, causing purchasing power to drop, while household debt has risen and the country's political turmoil has hit demand for residential projects located close to anti-government rally sites.

"We believe our total revenue growth will be better than the overall market because Bt3 billion worth of backlog - out of a total backlog of Bt8 billion - will be booked as revenue this year. The rest will be from our existing projects and new projects launched this year," he said.

In 2014, the company estimates total presales will be worth Bt21.4 billion and total revenue will be Bt20.9 billion - Bt19.4 billion from sales of residential projects and Bt1.5 billion from rental income. These figures are up 5 per cent and 5.4 per cent respectively from 2013. Last year saw total presales worth Bt20.4 billion and total revenue of Bt19.99 billion - Bt18.47 billion from sales of residences and Bt1.5 billion from rental income. These figures were up 20 per cent and 59 per cent respectively from the year 2012.

To boost its total revenue to achieve the target, the company plans to launch 26 new residential projects worth Bt22.3 billion. Three of these will be premium single detached houses under the brand "Quality Houses" in Chiang Mai, and two are luxury condominiums in Chiang Rai and Cha Am. Twelve projects are under the brand "Casa" in three categories: single detached houses, townhouses and condominiums. The next eight projects under the brand "The Trust" are in the same three categories, while three projects are townhouses under the brand "Gusto".

The company also set aside an investment budget of Bt12.6 billion for this year - Bt4.6 billion to buy undeveloped land, and Bt8 billion to construct residential project infrastructure and residential units. The company's investment budget will come from the company's cash flow and an issue of debentures worth Bt4 billion in this year, Bt2 billion of the total will be issued in the second quarter of this year, and Bt2 billion will issue in the second half of this year.

Currently, the company has a debt-to-equity ratio of 1.08:1, which leaves room to issue debentures to pay back some of its existing debentures, which will expire this year, and to support its investment plan, he said.

Following the new residential project launch this year, residences priced not over Bt10 million will account for 75 per cent of total revenue, and 25 per cent will be luxury residences above that price.

Meanwhile, 23 per cent of total revenue will come from condominiums this year, down from 35 per cent last year; 23 per cent from townhouses (up from 15 per cent last year), and 54 per cent from single detached houses, up from 50 per cent last year.


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