Pruksa is revamped to sustain growth
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Condo construction subcontracted; focus on low-rises
Leading property firm Pruksa Real Estate has restructured its business after last year’s flooding to support sustainable growth this year.
The first policy change is that the company will appoint subcontractors to build condominium projects rather than constructing them on its own.
It has also adjusted the staffing level at its subsidiary Kasorn Construction so that the sole focus is on the development of low-rise homes.
This has resulted in about 100 of the staff with experience in condominium construction deciding to resign, leaving 60 employees at Kasorn Construction, Pruksa chief executive officer Thongma Vijitpongpun said yesterday.
Pruksa has also revised its business system to support long-term growth. Revisions have been made to the evaluation system and key performance index, among other areas.
“This is the way to drive our business for sustainable growth in the long term,” he said.
Meanwhile, Thongma believes the property market this year will experience flat growth or a drop of as much as 5 per cent, with most potential customers continuing for the moment to delay their purchasing decisions.
“We believe the market will return to normal in the second half of the year when it becomes clear what the government will do to manage future floods,” he said.
He said that last week the government had demonstrated its concern about the problem and he believed it would manage the flood situation this year better than it had done last year, which was why home-buyers’ confidence would return in the second half.
Pruksa also plans to restructure its debt ratio by issuing debentures worth between Bt2 billion and Bt5 billion in March or April, bringing forward the original plan for issuance in the second half of the year.
This is because the company has seen strong demand in the debenture market so far this year, said chief financial officer Somboon Wasinchutchawal.
“This [the proceeds] will be used to pay back our debt due this year, and also to restructure our debt ratio by increasing long-term debt from the current level of two times short-term debt to three times. This will give us flexibility to manage our debt ratio,” he said.
In light of the business-restructuring policy, the company targets presales of Bt29 billion and revenue of Bt26 billion this year, up 16 per cent and 10 per cent respectively from the Bt25.5 billion and Bt23.4 billion achieved last year.
“Our revenue in 2011 was 0.06 per cent higher than in the previous year. In 2010, we recorded revenue of Bt23.407 billion, and we had revenue of Bt23.422 billion last year,” said Pruksa chief business officer Prasert Taedullayasatit.
The company has a backlog worth Bt32.99 billion, Bt19.51 billion of which is expected to be booked as revenue this year and the remainder in 2013 and 2014. This will guarantee that this year’s revenue achieves the target, he said.
The company will also launch 49 residential projects worth Bt34 billion combined this year, driving growth in line with the business plan, he added.
