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QH turns to new funding sources

Bangkok Post Feb 28, 2009 An unpredictable market has forced the listed developer Quality Houses Plc (QH) to save costs and maintain liquidity and to find alternative funding sources to replace project loans. "2009 will be worse than last year. To survive the situation, we have to limit investments, be more cautious and maintain liquidity," president Rutt Phanijphand said yesterday. The company's total investment for 2009 will be 6 billion baht, down from 10 billion last year. Around 5 billion will be allocated to housing construction. Quality Houses will slash its investment in land to only 600 million baht - down from 4 billion last year - but is confident its current land will be enough for development over the next two years. The company will also issue 1.3 billion baht in three-year-maturity debentures in March to reduce short-term loans. The debentures will be distributed through Siam Commercial Bank, Bangkok Bank and TMB Bank. Mr Rutt said 1 billion baht would be spent on repaying project loans that bear higher interest and the rest would provide working cash. The company now has at least 500 million baht of cash in hand. To date, it has 9.2 billion baht worth of outstanding debentures. Although it could draw up to 10 billion baht of project loans, the company still prefers to issue debentures. The company's sales in the first two months fell 20% year-on-year to 1 billion baht, with January worse due to poor sentiment. QH targets 1.5 billion baht in sales in the first quarter. QH yesterday reported consolidated revenue for 2008 of 10.71 billion baht, up 3.4% from 10.36 billion in 2007. Housing sales were 9.44 billion baht, up 4.3% year-on-year. Recurring income was 890 million baht from residential units and 280 million from office rents. Net profit was 1.55 billion baht, representing a 46% rise year-on-year. The net profit margin climbed to 15% of revenue due to sales of high-end condominiums and tax benefits. The company is targeting 11 billion baht of revenue this year with 10 new projects worth 14 billion baht - two high-end single house projects, three mid-range single house projects, three mid-range townhouse projects and two condominium projects. In the second quarter, QH plans to launch two condominium projects that are currently under construction and will be ready for transfer next year. They include the 3.4-billion-baht Q-Lung Suan freehold condominium, with 171 units priced at 180,000 to 200,000 baht per square metre. The other project is the 2.3-billion-baht Q House Condo Sathorn on Krung Thonburi Road, with 533 units priced at 74,000 to 94,000 bath per sq m.

 

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