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Housing developers report fat earnings

The Nation May 21, 2009 Net profit margins of top 15 recorded at between 13 and 26 per cent While many of Thailand's businesses are suffering from the effects of the economic downturn, 15 of the country's listed property developers recorded fat first-quarter profit margins of 13-26 per cent. The remaining 10 property firms out of 25 listed on the stock exchange reported profit margins lower than 10 per cent or a net loss. A survey by The Nation, conducted after the firms announced their first-quarter financial results, found Supalai led the pack with a net profit margin of 26 per cent, which saw its net profit for the quarter jump a surprising 213 per cent year on year to Bt541.11 million. MK Real Estate Development was in second place with a profit margin of 23 per cent, and market leader Land & Houses came in third with a margin of 21 per cent. (For other firms, see graphic). Supalai president Prateep Tangmatitham said his company's first-quarter net profit margin was higher than that of other property firms because the company had succeeded in managing its construction and administrative costs even though it launched a number of new residential projects in the first three months of the year. The company also benefited from the government's tax incentives. Those helped lift its net profit to Bt541.11 million in the first quarter, up 213 per cent from Bt172.93 million in the same period last year. Preuksa Real Estate CEO and managing director Thongma Vijitpongpun said his company succeeded in reducing its inventory during the first quarter, from an average number sufficient for three months' trading to sufficient for two months. This reduced the company's management and administrative costs. Meanwhile, Preuksa sped up its construction process so that completion of low-rise projects could be achieved within 100 days. That helped the company save on construction costs, particularly for labour. As a consequence, the company succeeded in maintaining a net profit margin of 18 per cent despite its inability to raise the price of its residences and the high price of construction materials, he said. "We cannot increase our residential prices, because the market now has high competition. When we want to generate high returns, we must manage our costs so that they're lower than those of our competitors," Thongma said. Asian Property Development CEO Anuphong Assavabhokhin said his company's net profit margin remained higher than 15 per cent in the first quarter because the company had succeed in transferring condominium projects to customers during the first three months. "Condominium projects generate a higher return than low-rise residential projects. They generate a gross margin averaging 35-40 per cent and a net profit margin averaging 20-23 per cent. Our low-rise projects recorded a gross margin of 28-30 per cent and a net profit margin of 12-15 per cent. When combined, the company's net profit margin was 17 per cent, and that was better than others in the market," he said.

 

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