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UPDATE 1-Thai developer Pruksa expects record net profit in 2014
September 18, 2014 / 12:16 PM / 3 years ago

UPDATE 1-Thai developer Pruksa expects record net profit in 2014

* Pre-sales to exceed target after hitting record in August

* Sector seen down 10 pct this year, recovery in 2015 (Adds quotes on industry outlook, details)

By Khettiya Jittapong and Saranya Suksomkij

BANGKOK, Sept 18 (Reuters) - Pruksa Real Estate PCL, Thailand’s second-largest property developer by market value, on Thursday said it expects record net profit this year thanks primarily to a recovery in housing demand spurred by a stabilising political climate.

Pruksa, like bigger peer Land and Houses PCL, has been benefiting from a recovery in demand since a military coup d‘etat in May ended months of political unrest. Anti-government protests from late last year had hurt consumer confidence and economic activity, prompting developers to delay new projects.

Pre-sales - or potential income from properties customers have committed to buy - are likely to exceed Pruksa’s full-year target of 43 billion baht ($1.3 billion) after the amount hit a monthly record in August, Vice Chairman Lersak Chuladesa told Reuters in an interview, without providing figures.

“We got a record pre-sales in August, which showed real demand in the housing market. This uptrend should continue for the last four months of this year,” he said, adding the country’s low interest rate would encourage demand for mortgage loans.

The company’s pre-sales dropped in the first quarter but picked up in May, helping Pruksa end the first half with a 35 percent rise in net profit to 2.94 billion baht. Profit last year reached a record 5.8 billion baht.

With consumer confidence improving for the fourth straight month in August, Pruksa raised the number of projects it aimed to launch this year to 73 from 48. In the first half, the company began 38 projects, Lersak said.

With the increased number of projects, Pruksa is aiming for revenue of 42 billion baht this year. That compares with 20 analysts’ average forecast of 41 billion baht, according to Starmine SmartEstimate, which gives increased weighting to forecasts from the more accurate analysts.

Analysts expect net profit of 6.25 billion baht.

For now, Pruksa primarily builds housing in Bangkok and the capital’s surrounding provinces. It is market leader in the low-priced sector where the average price is 2.2 million baht per property.

The Thai property market accounts for about 5-6 percent of gross domestic product. The market’s pre-sales are likely to contract 10 percent to 590 billion baht this year because of the unrest, Lersak said.

The market is likely to recover and grow 12 percent next year as the military-led government plans to launch infrastructure projects over the next eight years, which will stimulate housing demand in the provinces, he said.

Pruksa aimed to tap housing markets in the provinces, while the formation of Southeast Asia’s single market in late 2015 will boost demand for housing products, he added.

Given difficulties in doing business overseas, the company has scraped plans to launch housing projects in Vietnam and Indonesia, but maintained its investment in India, Lersak said.

As part of cost control measures, the company has shortened construction times, reducing its book-to-transfer period to 98 days from 146 days last year, he said.

Pruksa shares closed 1.5 percent higher on Thursday compared with a 0.9 percent rise in the broader index.

$1 = 32.2900 Thai baht Additional reporting by Shilpa Murthy in Bangalore; Editing by Mark Potter

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