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Financial Result

Top developers have good 2013

Despite political factor in Q4 backlog of units transferred in final quarter enables them to achieve decent full-year growth, but current market very sluggish

Listed property firms' financial results for 2013 show average growth of more than 10 per cent both in terms of revenue and net profit, despite the political turmoil dampening the economy in the final month of the year.

This was due to the high value of their backlog of properties booked in 2011 and 2012 and for which the units were completed and transferred to customers in the fourth quarter of last year.

According to the financial results filed with the Stock Exchange of Thailand this week, most listed developers recorded full-year revenue and net-profit growth of between 10 per cent and 20 per cent.

Their net profit margin, meanwhile, came in at between 14 per cent and 20 per cent on average. (For more details, see graphic.)

Pruksa Real Estate president and CEO Thongma Vijitpongpun said that although the company's presales in the final quarter had dropped by up to 30 per cent compared with the same period in 2012, it had been able to record full-year growth in both total revenue and net profit above what it had estimated, thanks to the number of residential units from its backlog that were successfully transferred to customers on time.

"Most of our customers continued to have their homes transferred to them when the projects were completed. This helped our financial results for the year meet the target," he said.

Thongma said some 23 per cent of its customers had not, however, been able to complete their purchases, having failed to get their mortgage applications approved by the banks.

That said, the company continued to find new customers to buy these properties, in many cases encouraging the replacement buyers to get a loan by adding co-borrowers when applying for a mortgage, he added.

Pruksa recorded revenue of Bt39.04 billion and net profit of Bt5.8 billion for last year, up 43.84 per cent and 52.63 per cent respectively from the 2012 levels.

The company's net profit margin was 14.85 per cent, against 14.33 per cent the year before.

Quality Houses president and CEO Rutt Phanijphand said the developer now had a backlog worth up to Bt10 billion that would generate income through to the end of next year.

The backlog boosted its revenue to Bt19.9 billion last year, well above the earlier estimate of Bt18 billion and 38.81 per cent higher than the Bt14.4 billion generated the prior year.

Meanwhile, net profit grew 34.69 per cent to Bt3.3 billion, from Bt2.45 billion in 2012.

"Although the economy in the final quarter of last year was negatively affected by the political turmoil, it had less of an impact on property business at that time, due to the number of customers continuing to transfer their homes on time," he said.

Much weaker first quarter

The political turmoil is, however, directly affecting the property sector in the current quarter, with listed developers' presales showing signs of coming in between 30 and 50 per cent lower than in the same period last year.

"We accept that the number of customers visiting our condominium projects in the first two months of this year has dropped by more than 20 per cent compared with the normal situation, as home-buyers are concerned about the political turbulence negatively hitting their earnings in the long term," said LPN Development managing director Opas Sripayak.

Meanwhile, supply and demand for condominiums this year are showing signs of falling some 28 per cent below last year's level, with home-buyers concerned about their future income and property developers reducing the number of new projects being launched at a time when they have more inventory, he said.

LPN estimates that new condo supply this year will be in the region of 60,000 to 65,000 units, 23-29 per cent less than the 85,000 units launched over the course of last year, he added.

Three property associations - the Business Housing Association, Thai Real Estate Association and Thai Condominium Association - are hoping that the "30th House & Condo Show 2014" being held from March 13-16 at the Queen Sirikit National Convention Centre will boost demand in the currently sluggish market.

Anongluck Padhayanun, deputy managing director for marketing and sales of Chaopraya Mahanakorn and chairperson of next month's show, said demand for detached housing, townhouses and condominiums had dropped by between 20 and 30 per cent - depending on location and project type - so far this year, thanks to the prolonged political turmoil.

She said the organisers had decided to continue with the event, and that more than 200 property firms would be introducing about 1,000 projects residential projects nationwide - worth over Bt100 billion - at the show.

The participants will offer special promotional campaigns to boost sales at the event.

Meanwhile, commercial banks will also offer special financial packages for home-buyers who decide to purchase a property during the four-day show.

"We hope next month's show will boost demand and we target sales worth up to Bt3 billion, which is nearly the same level as at last year's event. But the targeted number of visitors is only 80,000, against some 100,000 who attended last year," she said.


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