Sansiri sees higher net profit despite fewer launches

Real Estate January 08, 2014 00:00

By Somluck Srimalee
The Nation

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Sansiri Plc plans to stretch its net profit margin to more than 10 per cent this year from less than 5 per cent in the first nine months of last year after revising its residential project launches from 48 last year to only 19 worth Bt33.26 billion this y

“When we launch fewer residential projects, that will reduce our marketing and promotion expenses, which were our burden till our net profit shrank to less than 10 per cent in the last three years,” president Srettha Thavisin said yesterday.
Despite launching fewer projects, the company can leave its sales target as is because it has a backlog worth over than Bt63 billion, which will booked as revenue from this year till 2017. Bt22 billion will be booked as part of its total revenue target of Bt34 billion this year, which is nearly the same as its total revenue target last year.
The company earned Bt872.78 million on revenue of Bt20.06 billion in the first nine months of  lastyear.
Of the 19 new projects, nine will be condominiums that have already had their environmental impact assessment approved, eight will be single family homes and two will be townhouses. About 89 per cent will be located in Greater Bangkok and 11 per cent in the provinces. 
“We will focus on major provinces such as Khon Kaen, Chiang Mai, Nakhon Ratchasima and Phuket rather than second-tier provinces like Ubon Ratchathani and Phitsanulok because we have to wait and see if the government’s infrastructure investment worth Bt2 trillion will be delayed,” he said.
Following the company’s investment plan for this year, Bt28 billion will be spent on the construction of new and existing residential projects. Financing will come from internal cashflow and from issuing debentures. The financing plan will be proposed to shareholders  for approval in April.
“We may ask our shareholders to consider an issue of debentures worth up to Bt4 billion but it may be lower than that depending on market sentiment,” he said.
The property market will growth at 3-5 per cent this year if the political problems end this quarter. If not, the market may be maintained at nearly last year’s level. 
The company has embarked on a new business model to generate recurring income by opening a small retail business called Neighbourhood Mall on Sukhumvit Soi 77. More malls will follow at its other residential projects. 
This follows the company’s debut of its hotel collection last year.
Recurring income will amount to 3-4 per cent of its total revenue but the new businesses will support its customers’ needs, he added.