Pruksa sets Bt18 bn investment budget, eyes recurring-income
PRUKSA Holding has set aside a budget of Bt18 billion to purchase land and invest in new businesses that will generate recurring income, targeting total revenue of Bt50.2 billion, up 9 per cent from last year, the group’s chief executive officer Thongma Vijitpongpun said.
Up to Bt16 billion of the investment budget will be used to buy undeveloped land, and the rest used to set up new businesses, including a hospital, he told a news conference yesterday.
The investment budget will come from the company’s internal cash flow and issuance of debentures worth Bt8 billion this year, including a Bt5-billion debenture issue next month, he said.
He added that the company planned to launch 72 new residential projects worth Bt60.8 billion this year. Six of the projects, worth Bt9.9 billion, will focus on the premium market, and the rest worth Bt50.9 billion on the lower- and middle-income markets.
“Our strategy is to maintain our business growth for the long term. As a result, we have restructured to separate our operations into three business units,” he said.
Two of the business units are focused on developing residential projects. The “Pruksa Real Estate – Value” unit will handle developments of homes costing less than Bt10 million, while “Pruksa Real Estate – Premium” will focus on homes costing more than Bt10 million.
The third business unit will focus on investing in new businesses. These could entail setting up new companies, or they could be operated under the holding company, Thongma said.
Pruksa Real Estate – Value is managed by Piya Prayong, who has been appointed as its CEO, and Pruksa Real Estate – Premium is run by Prasert Taedullayasatit, who has also been appointed as a CEO. The appointments will become effective on February 1.
The investment budget will be considered by Pruksa Holding’s board of directors next month before starting any new businesses, Thongma said.
Prasert said the company targeted revenue from premium products to increase from less than 10 per cent of the total last year to 30 per cent by 2019.
Thongma said the company also targeted recurring income to account for 10 per cent of its total revenue by 2021, up from zero now.
He said the company had set an annual sales target of Bt100 billion within five years by focusing its investment in the local market only.
“We believe that the property market over the next five years will show strong growth following the government’s policy to spend more than Bt1.77 trillion on infrastructure projects between now and 2022.
“The property market, especially residential demand, will grow strongly after the country’s mass-transit expansion. This is the major reason our sales will amount to Bt100 billion five year from now,” he said.
Meanwhile, residential prices this year look like rising by 3-5 per cent because of higher land prices and interest rates. However, the company estimates that the overall property market this year will grow by at least 5 per cent as people who delayed their home purchases last year finally take the plunge, Thongma said.
