Top developers buck trends, post good revenue

 
This is largely due to the companies having transferred significant numbers of condominium units from their backlogs to customers, following presales made at the projects after their launches during the previous two years.
Meanwhile, the combined net profit of the top 10 listed residential developers has grown even more strongly, coming in at Bt24.98 billion for the first nine months – 30.1 per cent higher than in the same period last year – according to the companies’ financial results reported to the Stock Exchange of Thailand early this week.
Land and Houses achieved the highest net earnings among the 10 companies at Bt7.12 billion, up 54.78 per cent year on year, on revenue of Bt24.16 billion – 33.92 per cent higher – thanks to strong sales, as well as recurring rental income and higher dividends from subsidiaries than a year ago.
Pruksa Real Estate was the second-highest profit-maker, with net earnings of Bt4.03 billion, down 14.61 per cent from the same period last year due to the company incurring a high marketing cost in a bid to boost presales to the targeted level of Bt51 billion for the full year.
Supalai ranked third in terms of net profit, posting Bt3.72 billion for the nine months, for a year-on-year increase of 24 per cent thanks to units in newly completed condominium projects being transferred to customers during the second half of the year.
(See graphic for the net-profit figures of all top 10 listed developers.)
As to revenue generated during the first nine months, Pruksa Real Estate was the market leader with income of Bt33.11 billion, down 2.27 per cent from the same period last year, followed by Land & Houses with Bt24.16 billion, up 33.92 per cent.
Sansiri came third with Bt22.7 billion, down 19.15 per cent, year on year.
(See graphic for the revenue figures of all developers in the top 10.)
 
Fourth-quarter prospects
Meanwhile, leading listed developers remain confident that their revenue and net earnings in the current quarter will be higher than in the final three months of last year, thanks to project backlogs that will be transferred to customers by the year’s end.
Their presales look set to decline this quarter, however.
Supalai managing director Tritecha Tangmatitham said that although residential purchasing demand had declined this quarter from the same period last year, the company felt confident its full-year revenue would achieve the growth target of 10 per cent to Bt22 billion, thanks to six condominium projects – comprising 3,988 units worth Bt8.2 billion – being completed and starting to be transferred to customers over the final three months.
Some Bt4.7 billion worth of the units in these projects will be delivered, accounting for the lion’s share of projected sales of Bt8.2 billion in the quarter, he added.
Pruska Real Estate co-chief executive officer Lersuk Chuladesa said the value of the overall property market in the Bangkok metropolitan area over the first nine months had come in at an estimated Bt265.77 billion, representing 4-per-cent growth from the same period last year. 
However, in the absence of any positive factors that can improve prevailing stagnant economic conditions, and a lack of confidence among consumers in the current quarter, the developer expects the final full-year property market in the metropolitan area will be the same as or similar to that of 2015, when sales totalling Bt350 billion were made, he said.
“We plan to launch 20 new residential projects worth up to Bt20 billion during the rest of this year, to boost our presales to the targeted level of Bt51 billion for the entire year,” he added.
Meanwhile, Pruksa is confident it can boost its total revenue to the full-year target of Bt52 billion, thanks to its project backlog worth Bt27.62 billion, some Bt10.32 billion of which will be released this year, and sales at 181 active projects valued at Bt85.44 billion. 
These factors will drive revenue to Bt52 billion by the year’s end, after the company recorded revenue of Bt33.11 billion for the first nine months, Lersuk said.
Sansiri president Srettha Thavisin said his company would transfer the Bt2-billion Line Sukhumvit 71 condominium to customers this quarter, as well as units in the Bt2.9-billion Edge Sukhumvit 23 later this month. 
The developer also plans to launch more projects over the remainder of the year in a bid to boost its presales and revenue figures to the levels targeted for the full year.
“We may revise our revenue and presales values in the next two weeks, but we have to wait and see whether demand for the rest of the year will improve after home-buyers delayed their purchasing decisions in the third quarter and October,” Srettha said. 
SC Asset Corp chief executive officer Nattapong Kunakornwong said purchasing demand had fallen away in the current quarter, as a result of which the company had decided to revise its business plan by delaying the launch of four projects worth Bt11 billion combined to the first half of next year.
This has an impact on presales, which will be lower than the full-year target of Bt12 billion, while total revenue will also be down from the earlier estimate of Bt15 billion for the year, he said.
However, SC Asset is confident its overall revenue for the year will be still better than last year’s, when Bt14.18 billion was recorded. 
This is thanks to further sales from inventory – worth Bt28.5 billion as of September 30 – at the developer’s 34 residential projects, the CEO added.
Meanwhile, Golden Land Property Development – another top listed developer – announced revenue of Bt8.14 billion and net profit of Bt937.48 million for the first nine months, up 43.3 per cent and 152.7 per cent respectively, year on year.
“Our total revenue and net profit in the first nine months were better than in the same period last year thanks to our backlog of projects that launched since the beginning of 2015 and which we have started to transfer to customers this year, even though residential demand looks to be declining during the final part of this year,” CEO Thanapol Sirithanachai said.
 He added that the company was confident its full-year total revenue would come in at the targeted Bt10 billion, given Golden Land’s plan to launch a further town-home project by the end of December, which would boost fourth-quarter income.
 
Growth at medium-sized players
Medium-sized listed property firms, each with total revenue of no more than Bt5 billion, also witnessed revenue and net-profit growth in the first nine months of the year, thanks to much of their backlog being transferred to customers – and also to their success in offering products that serve niche markets.
Sena Development posted revenue of Bt3.19 billion and net profit of Bt662 million for the period, up a whopping 118 per cent and 285 per cent respectively from the same nine months last year, thanks to its condominium backlog – the Niche Mono Ratchavibha, the Niche ID Seri Thai and the Niche ID Bang Kae Phase 1 – having been transferred to customers in the second and third quarters.
Moreover, in a bid to boost presales to the targeted level for the full year, the company plans to launch two further condominium projects worth Bt1.4 billion combined, its director Kessara Thanyalakpark said.
“We also had a backlog worth Bt2.7 billion as of September 30, up to Bt800 million of which will transfer to customers and drive revenue growth to achieve our target of Bt4 billion for the year,” she said.
Lalin Property reported revenue of Bt2.05 billion and net earnings of Bt385.3 million for the January-to-September period, an impressive 58 per cent and 100.4 per cent higher, respectively, than in the first nine months of last year, thanks to its business model to develop homes that specifically serve customer demand, chief executive officer Chaiyan Chakarakul said.
“Although demand in the market dropped, supply also reduced when most property firms delayed the launch of new residential projects, which challenged us to develop homes that truly match demand. This strategy enabled us to boost our revenue and net profit to achieve our targets for the first nine months of the year,” he explained.
 
Market contraction
Although listed property firms, both the top 10 and medium-sized developers, have enjoyed good financial results for the first nine months of the year, Kasikorn Research Centre forecasts that the property market in Bangkok and suburban areas could drop by up to 14 per cent this year due to reduced demand, with only 93,000 new units being put on the market.
“Household debt is still at a record high, and this has impacted on residential purchasing power this year, as the commercial banks have restricted the provision of new mortgages for customers who have high debt,” the centre stated in its research.
The Government Housing Bank’s Real Estate Information Centre (REIC) has come out with a similar forecast, estimating that the overall property market in Bangkok and its suburbs will drop by about 15 per cent this year due to newly launched projects comprising only 94,000 units, some 52,000 of which are condominiums and the remainder mainly detached housing and townhouses. 
Moreover, new mortgages provided during the year will be nearly the same as last year’s level, at Bt580 billion, the REIC said.
“The market will slow down during the rest of this year, which will impact directly on the overall market [for the full year]. This is because the final quarter is normally the high season for sales, but this year is different, as a result of which the overall property market will be lower than last year,” REIC director-general Samma Kitsin explained.