Property Perfect eyes Bt22.39 bn revenue

This is a part of its 2014 revenue target of Bt22.39 billion, CEO Chainid Ngowsirimanee said in a group interview yesterday.
The company targets its net profit margin this year expanding to 10-12 per cent when its condominium projects sold since 2010 will be transferred to customers. This is the first time in three years that its net profit margin will run in double digits after bouncing around between 5-8 per cent a year since 2009.
The company will start to invest in the retail business next quarter. It may launch two or three projects out of the four new retail businesses in its business plan for up to 2014. A community mall will be developed by its 88-per-cent owned subsidiary WE Retail Plc.
“We cannot say how much we will invest in the retail business when we’re now in the design phase but we target our four new retail businesses to offer a combined 100,000 square meters,” he said.
If the cost to develop a retail business averages Bt15,000-Bt20,000 per square metre, the total budget might reach Bt1.5 billion-Bt2 billion, or more depending on construction design.
The firm is talking with foreign investors to jointly develop this project.
“We are negotiating with a Singapore firm and a Japanese firm that have long experience in developing shopping malls in Asia. The deal will be concluded in the third quarter of this year. They may take at least 30 per cent of WE Retail or may be only a partner, depending on the deal. We’re willing to hold at least 51 per cent of this firm for the long term,” he said.
The company has restructured to focus on four business units – residential, construction, retail and other, which currently is involved with dormitories.
The residential business is under Property Perfect and its wholly owned subsidiaries Estate Perfect Co and Bright Development Co.
The construction business is operated by U&I Construction Co, which is building eight-story condos, and Perfect Prefab Co, which is developing low-rise residences such as single-family homes, duplexes and townhouses.
The retail business will be led by WE Retail, which used to be Daidomond Plc before it was taken over by Property Perfect early this year and renamed.
The dormitory business under the brand Uniloft is managed by Bright Development Co.
The company targets total revenue of Bt12.6 billion this year and Bt19.5 billion next year. Up to 95 per cent of its total revenues in 2012-13 will come from residential projects. Recurring income from both the dormitory and retail businesses will account for 14 per cent of revenue in 2014.

Debentures and property fund

For its business plan to 2014, the company has to invest more than Bt10 billion in both the residential and retail businesses. Its sources of funds will be internal cashflow, a debenture issue, the creation of property funds and an increase in registered capital.
The company plans to raise Bt800 million through a rights offering this month to existing shareholders at the ratio of one new share per six existing shares at the price of Bt1 per share. Subscribers also will receive one free warrant for two existing shares.
The company will issue three-year debentures worth Bt3 billion in August and open a property fund worth Bt1 billion in the last quarter of this year when its dormitories in Chiang Mai and Nakhon Pathom are completed in that quarter. And it will offer property funds worth Bt2.05 billion in 2013 and Bt2 billion in 2014.
They will help the company reduce its debt-to-equity ratio from 1.7 now to 1.4 by year-end and to 1.14 by 2014.
With its business plan, the company’s equity will increase to nearly Bt10 billion. That will help boost liquidity in its stock so that both foreign and institutional investors will trade its shares after the company joins the SET 100 Index on July 1, he added.