August 22, 2014 01:00 By Somluck Srimalee The Nation
Net profit, presales down as politics, slowdown dents market for new projects
Most listed property firms have posted revenue and net-profit growth for the first half of the year, while an across-the-board fall in presales reflects the fact that the residential market declined during the period.
The first-half financial results of developers are in line with presales in 2012 and 2013 for homes that were delivered to customers this year, especially among companies that develop condominium projects.
However, new presales in the first half of this year were at a lower level than during the past two years.
The listed developers posting first-half results to the Stock Exchange of Thailand, and achieving revenue and net-profit growth from the same period last year, are Pruksa Real Estate, Land & Houses, AP (Thailand), Supalai, Ananda Development, Raimon Land, Univentures, Major Development, Golden Land Property Development, Lalin Property, and Sena Development.
Sansiri recorded a fall in revenue but growth in net profit, while Quality Houses and Property Perfect both posted revenue growth but a decline in net profit.
LPN Development and SC Asset Corp, meanwhile, recorded year-on-year falls in both their revenue and net earnings.
Meanwhile, all 16 listed developers posted first-half presales that were lower than in the same period last year.
This was largely due to home-buyers delaying their decision to purchase a property during the political turmoil in the first quarter, as well as the country’s economic contraction during the first three months of the year – and growth of less than 1 per cent in the second quarter.
For example, Pruksa Real Estate recorded presales of Bt17.93 billion in the first half, 20.9 per cent lower than the Bt22.67 billion achieved a year earlier.
Sansiri’s presales came in at Bt4.28 billion, some 85 per cent down on the Bt29 billion recorded in the same period last year.
SC Asset’s first-half presales were worth Bt3.46 billion, some 50.57 per cent lower than the Bt7 billion generated from January to June last year.
LPN Development recorded presales worth Bt10 billion, which represent a year-on-year decline of 35 per cent from Bt15.5 billion.
Meanwhile, the Agency for Real Estate Affairs’ survey of new residential projects launched in Bangkok and its suburbs during the first half found 210 projects with 49,816 units for sale with a combined value of Bt138.06 billion.
The numbers are 24 per cent down in terms of new units and 28 per cent lower in terms of value compared with the same period last year.
“Our presales were lower than we had estimated in the first half, due to the political conflict and the country’s economy contraction in the first four months of the year before the coup. However, we believe the market will recover in the second half, having seen strong demand return in June and July,” said Pruksa Real Estate president and CEO ThongmaVijitpongpun.
Sansiri president SretthaThavisin said his company’s presales had been lower than expected because of only slight market growth from the final quarter of last year onwards.
“We revised our business plan downward early this year. However, this will not affect our financial results, as we have more backlog to generate income this year through 2017. Our goal this year is to generate high net profit rather than high revenue,” he said.
New project launches
Given the better outlook for the remainder of the year, all residential developers – both listed and non-listed – have begun to parade the launches of new projects over the second half of the year.
These projects are worth more than Bt177 billion combined, according to a survey by The Nation last month.
This will boost their second-half presales and give the companies a backlog for generating income during 2015 and 2016.
“Property developers’ presales will be used to forecast their financial results over the next two years. If they record presales lower than the level estimated this year, that means they will record lower income next year and in 2016,” said one property expert.
Meanwhile, residential developers are strongly confident that their financial results in the second half of the year will meet targets, with most of them most of them maintaining full-year revenue and presales targets set early in the year.
AP (Thailand) CEO Anuphong Assavabhokhin said that although the property market had dropped during the first half, the company was sticking to its presales estimate of Bt21 billion and revenue goal of Bt21 billion for the full year, which – if achieved – would be 5 per cent higher than last year’s outcome.
SC Asset deputy chief executive officer NuttaphongKunakornwong said the company was maintaining its full-year presales target of Bt12 billion and revenue estimate of Bt12 billion – up 20 per cent from last year – despite posting revenue of just Bt4.3billion and net profit of Bt415 million in the first half.
The first-half numbers were up 3 per cent and 15 per cent, respectively, from the same period last year.
“We believe our presales and revenue will be boosted during the second half,” he said.