Property Perfect to issue debentures, funds

Chief executive officer Chainid Ngow-Sirimanee said Bt500 million would come from two-year debentures and Bt2 billion from three-year debentures, both with at least at a 5-per-cent interest rate. They plan to launch next month.

The additional Bt2.2 billion will come from the property-fund sale of two dormitories, Uniloft in Chiang Mai and Salaya in Nakhon Pathom province. The property fund will be issued in the second half of this year. 

This is separate from an investment worth Bt11 billion, Bt2.5 billion of which will be used to buy land for residential development in 2013 and 2014. The additional Bt8.5 billion will be used this year for the project’s infrastructure. 

The rest of its investment budget will come from the company cash flow, Chainid added. 

That will drive its presale figure to Bt17 billion and is expected to generate at least Bt14 billion for the company’s revenue this year – or at least 60 per cent of its revenue target of Bt8 billion in 2011.

“When we issue the debentures and property funds, our debt-to-equity ratio will increase to 1.75:1, which is still lower than 2:1 and will help us reduce our interest costs from more than 5 per cent currently,” he said.

With the new financial plan, the company is targeting a double-digit profit margin of 11 per cent this year, which would be the first time since 2008.

Last year, the company’s net profit margin was only 6 per cent. 

Chainid added that although the company’s construction costs would rise by 12-15 per cent this year, its sales value would increase from an average of Bt8 billion to Bt17 billion. That will reduce its administration costs and generate a net profit margin of at least 11 per cent this year. 

Property Perfect believes that the market this year will grow at least 15 per cent from last year, as people who delayed buying in the final quarter will return to the market. This is shown in the company’s presales so far this year as of Wednesday, which were Bt1.2 billion or up 60 per cent from its presales of Bt750 million in the same period of last year. 

In 2011, the property market dropped to about 22 per cent of newly registered residences compared with 2010.

Given the strong demand this year, nine projects worth Bt11.8 billion – out of 24 worth Bt25 billion – will be detached-housing projects. Five projects worth Bt4.1 billion will be duplexes and townhouses. Eight projects worth Bt7.3 billion will be condominiums, and two worth Bt1.8 billion will be dormitories. 

Property Perfect also plans to invest in two community malls worth Bt1.87 billion through its subsidiary, V Retail. The malls will be on Sathorn and Sukhumvit 71 in Bangkok. This is apart from V Retail’s business expansion to create rental income. 

“We will target rental income for about 30 per cent of our revenue within the next three years. That will come from two businesses, dormitory and retail,” Chainid said.

The company plans to invest an average Bt2 billion a year to develop dormitories nationwide and an average of Bt1 billion to develop retail businesses.

“If we spend more than Bt1 billion for retail businesses, we may join with a foreign partner from Singapore, Fraser Group, or a new partner from Japan. That depends on the market size. They may invest in V Retail, with Property Perfect holding about an 88-per-cent stake in the firm,” he said.