Developers upbeat despite sales squeeze 

Real Estate February 21, 2018 01:00


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LISTED property companies Pruksa Holdings Plc and LPN Development Plc have reported declines in earnings for last year amid lacklustre market demand, but both have expressed confidence the market will pick up in 2018.

Pruksa Holdings reported to the Stock Exchange of Thailand (SET) late on Monday that it posted total revenue of Bt44.11 billion for 2017, down 6.5 per cent from the prior year. Its net profit dropped 8.1 per cent to Bt5.4 billion, from Bt5.9 billion in 2016. The results announcement marked the second straight year of declines in both revenue and net profit.

For LPN Development, 2017 total revenue plunged 34.17 per cent from the year before to Bt9.61 billion, and net profit skidded 51.19 per cent to Bt1.11 billion. The company cited a slump in demand from buyers, in a filing to the SET last week.

Despite the sagging earnings for 2017, both developers voiced optimism for improved numbers for 2018, backed by a restructuring of their operations. They have adjusted their business models to reflect a focus on new market segments and brand-building efforts to better compete with rivals.

Pruksa Holdings’ deputy group chief executive officer, Supattra Paopiamsap, said that beyond the slump in revenue and net profit for 2017, the company was encouraged by 7 per cent growth in presales to Bt47.53 billion for that year, from Bt44.34 billion in 2016. 

The company plans to this year release 75 residential projects, valued at Bt66.7 billion, that will boost its total presales and revenues for 2018, Supattra said in a press conference yesterday.

In addition, the company has introduced Pruksa Member, a marketing strategy “to promote a new boundless sales channel through word-of-mouth and the power of peer-to-peer recommendations”, she said. 

LPN Development also took heart from improved presales in 2017. They jumped 50 per cent from the year before to Bt16 billion.

The company had a total backlog of Bt7.4 billion at the end of 2017. Of this amount, Bt5.9 billion will booked towards revenue for this year, with the rest for 2019-20.

Like Pruksa, the company has expressed confidence that its operations will pick up this year under the new business strategy, titled a Year of Shift. It aims to focus more on the middle to upper income market, as it expands its customer base from the lower end of the market, according to the company’s statement to SET recently.

Early this year, 12 listed property firms announced investment budgets of between Bt98.04 and Bt99.04 billion to acquire land to develop residential projects worth between Bt385.15 billion and Bt385.64 billion in 2018, according to a survey by The Nation.

Most of them expect the property market in 2018 will this year will grow by up to 10 per cent from last year, when the market recorded a drop of about 5 per cent.