Pruksa targets more recurring income after becoming holding

"We decided to restructure our business by delisting Pruksa Real Estate from the SET [Stock Exchange of Thailand] and setting up a holding company called Pruksa Holding, which will apply to be a listed company in the next step.

"We want to stabilise our business growth by balancing our portfolio. We want both income from the sale of residential projects and recurring income to sustain our business for the long term by targeting our recurring income at up to 20 per cent of our total revenue within five to 10 years," Thongma Vijitpongpun, president and chief executive officer, told a press conference yesterday.

The process of delisting Pruksa Real Estate and applying to list Pruksa Holding will be completed in November.

The holding company will swap shares with Pruksa Real Estate at the ratio of 1:1. If Pruksa Real Estate’s shareholders do not need to swap shares with Pruksa Holding, they can continue to hold their stake in Pruksa Real Estate.

The company’s shareholders will meet to approve this plan on April 28.

According to the new structure, Pruksa Holding will hold 100 per cent of Pruksa Real Estate, which will continue to develop residential projects for sale.

Pruksa Holding will hold major stakes in new companies, which will contribute recurring income to the group.

The investment in an income-generating business can take the form of starting up the business itself, taking over or acquiring an existing business or entering into a joint venture with its strategic partners.

The return on investment in the new business cannot be lower than the level for its property business, which now runs a net profit margin of 15 per cent on average and return on equity of 23 per cent.

The new strategy will start next year after the restructuring is completed at the end of this year.

"We cannot give more information about what kind of new business we want to do now. Most of them are under study including the hospitality, office, retail and hospital businesses," Thongma said.

Pruksa Real Estate last year netted Bt7.68 billion, up 15.4 per cent, on revenue of Bt50.67 billion, up 18.7 per cent, thanks to strong housing demand and the government’s stimulus measure of temporarily reducing transfer and mortgage fees, to drive market growth in the final quarter of last year.

The company also reported presales rising 8.4 per cent to Bt42.38 billion and a backlog worth Bt25.9 billion at the end of last year. Up to Bt15.27 billion of the backlog will booked as revenue this year.

The company aims for revenue of Bt52 billion this year, Thongma said.