By SOMLUCK SRIMALEE
“Our debenture issue will reduce our financial cost from the average 4 per cent over the last year to 3.5 per cent this year, to help us keep financial costs healthy so as to allow for business expansion this year,” he said
Following the debenture issue, the company will spend to acquire land worth up to Bt4 billion this year, in order to launch 16 new residential projects worth a total of Bt20 billion in 2019.
Ten projects, worth Bt12 billion, will be condominiums and office buildings for sale, with the next Bt8 billion for developing single detached and townhouse projects.
“Our business strategy this year is to expand to all market segments to serve customer demand and to reduce the impact from our business risk, including interest rates rising, the Bank of Thailand [BOT] measure to restrict mortgage loans for second and third homes, and the drop in purchasing power to buy residential from both domestic and foreign investors,” he said.
This is a hard year for property firms to develop residential projects, Opas added. The demand to buy residential property will be limited following the BOT restriction on second and third homes. As well, there has been a drop in purchasing power for the lower-income market.
Given the hard period it faces, the company’s policy this year will be to control its management costs and to keep staffing levels to below 2,000, Opas said.
“We will not lay off our staff, but if a staff resigns we have no plan to recruit a replacement. However, we will expand our investment to develop our Big Data and digital systems to support our business, and to create business performance to compete with other property developers,” he added.
Following the market trend, LPN Development Plc has increased the sales for the middle market, with units priced between Bt2 million and Bt5 million accounting for 70 per cent of its portfolio. The next 20 per cent will target the premium market at prices above Bt5 million, and the remaining 10 per cent will be aimed at the lower-income market with prices under Bt2 million per unit.
The company also increased its income from recurring income from last year’s 2 per cent, to 15 per cent of total revenue this year, by focusing on rental residential and its service business, Opas said.
With that market strategy, the company expects to achieve Bt16 billion presales this year, up 6 per cent from presales of Bt15 billion last year.
The company also targets total revenue of Bt13.5 billion this year. Of this year’s revenue target, Bt12 billion will come from residential sales, and the remaining Bt1.5 billion from recurring income including residential for rental and its service business, he said.
Currently, the company has a total backlog worth Bt9 billion, with condominiums accounting for Bt6 billion, and the next Bt3 billion from single detached houses and townhouses.
The company also has a Bt7-billion inventory for sale. They will boost total revenues to achieve the target by the end of this year, he said.