By Somluck Srimalee
"Our strategy is to manage our investment budget by balancing homes for sale and businesses that will generate a return in the long run," Naporn Sunthornchitcharoen, a senior executive vice president, told The Nation.
The latest investment was the purchase of an apartment building in California worth US$10 million (Bt306 million) using part of its capital-expenditure budget worth $50 million for the United States.
Up to 80 per cent of the company’s annual revenue comes from residential sales and the remaining Bt1.5 billion to Bt2 billion from investments.
For example, the company established Bangkok Chain Hospital 10 years ago and it became successful. However, L&H believed that it did not have enough experience to drive growth further and that other firms could manage and improve the business better than it could, so its board decided to sell the stake in the hospital to new investors last year for a gain of more than Bt2 billion.
The company also sold its holding in Quality Construction Products last year to Siam Cement Group for a gain of Bt800 |million.
L&H’s investment portfolio is worth Bt13 billion at cost but about Bt25 billion by market value, or nearly double the cost basis.
Some of its businesses are Home Product Center, Quality Houses, Quality Construction Products, LH Bank, Asia Asset Advisory Co and LH Muang |Mai Co.
"When we invest, we consider the benefit in the long term. This is to sustain our growth over the long haul," Naporn said.
Part of its strategy is to branch overseas, especially in the US.
Although the company reaps returns from its investment portfolio, it still develops residential projects to cover all market segments at the pace of 14-20 a year worth Bt20 billion to Bt25 billion, depending on demand.
"Some of them will replace our existing projects that sold out and are ready to be transferred to customers," he said.
The three key criteria for proposing a project are segmentation, or who is the customer for the product; design, or what do customers want; and location, or is it convenient to transport.
Next year will also see 14-20 projects introduced, depending on market demand, but their locations will hug the new mass-transit routes.
When the government set the policy to invest in mass transit and infrastructure to link the suburbs to Bangkok’s central business districts and also to invest in infrastructure upcountry, that changed the property market to urbanisation, Naporn said.
Now there are more locations to launch a business that does not concentrate only on Greater Bangkok. This is the trend for property firms – to expand in the provinces – which started this year and will extend into next year.
"We have been in business in the provinces for more than 10 years but we will continue to expand upcountry at new destinations next year," he said.
The company targets revenue growth next year at 10-15 per cent after aiming for an increase of 14-15 per cent this year from Bt23.29 billion in 2011.
L&H showed revenue of Bt19.25 billion and net profit of Bt4.09 billion in the first nine months of this year.
"When we do business we’re concerned about our stakeholders," he said. "They have to get more benefits from our business. They include our stockholders, our customers, our staff and the community around our projects. That’s why we have to do business under the strategy to balance businesses and maintain our growth for the long term."