Friday, August 14, 2009

Thai Asian Property sees revenue above target

Published: 13 Aug 2009 23:09:25 PST

* Sees 2009 revenue exceeding target of 10 bln baht

* But higher advertising expenditure will cap profits

* To spend more than planned on land purchases this year

* Shares firm on relatively optimistic outlook

BANGKOK, Aug 14 - Thailand's Asian Property Development PCL expects 2009 revenue to beat its target due to condominium projects, but rising advertising costs will hold profits down at around last year's level, an executive said.

"Our revenue will be increased by three condominium projects that we will begin booking revenue from in the fourth quarter," Executive Vice President Pumipat Sinacharoen told Reuters in an interview.

"Our high-rise projects will help increase second-half profits, on top of tax savings, but we maintain our conservative projection for flat net profit for the year," he said.

Its second-quarter net profit fell nearly 30 percent as the majority of its revenue for the quarter was from low-margin town houses and detached houses. Last year's revenue in that quarter was mainly from high-margin city-centre condominiums.

It notched up sales of 5.2 billion baht ($152.8 million) for the first six months of this year, about half of its revenue target for the year of 10 billion baht.

Its 2008 net profit was 1.64 billion baht.

Broker Kim Eng Securities forecast net profit for this year of 1.47 billion baht while Kiatnakin Securities and Siam City Research Institute both have an estimate of 1.5 billion.

Helped by the relatively optimistic comments, Asian Property shares were up 1.9 percent at 5.45 baht at the midday break, when the main stock market index <.SETI> was down 0.7 percent

Shares in larger rivals were lower, with Land & Houses down 0.8 percent, Quality Houses down 1.6 percent and Preuksa Real Estate <PS.BK> 1 percent lower.

The developer has raised its spending on land purchases this year to 3.0 billion baht from the planned 2.0 billion baht and was on track to launch six projects in the second half worth about 13 billion baht, four of them condominiums, Pumipat said.

The company spends about 3 percent of a project value on advertising, according to Pumipat.

RIDING THE RECOVERY

Asian Property has increased its revenue by half over the past two years as a boom in the city-centre condominium market meant that pent-up demand far outstripped supply, but that situation has reversed, not least because of the recession.

Pumipat said its condominiums sold out fast during that boom period but now the company expected the market to grow at a more normal pace.

"I don't think we will see those sort of hot sales and pent-up demand again, and now the market has a large volume of supply," he said.

"We aim for 10 percent growth in annual revenue from now on, with half from condominiums. We will grow in line with the Thai economy. There are many uncertainties in markets globally and our policy is to grow and to be conservative," he said.

The central bank expects the economy to contract by as much as 4.5 percent this year, but the authorities are optimistic that the worst of the recession may already be over. [ID:nBKT001045]

The company was maintaining its home prices this year and expected its average gross margin to be close to last year's, around 34 percent, Pumipat said.

Asian Property is Thailand's fourth-biggest housing firm by market capitalisation, valued at $367 million on the Thai bourse.

The company uses loans from financial institutions and bonds to finance its expansion. It was in talks to sell bonds worth 0.5-1.0 billion baht to a local investment fund and would decide next month whether to proceed, Pumipat said. ($1=34.02 Baht)

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