L.P.N. turns to low-rise development

Land budget hiked to fund township project

L.P.N. Development Plc has increased its land investment budget to 2.5 billion baht from 2 billion earlier so that it can acquire a large plot.

Managing director Opas Sripayak said the company, Thailand’s largest condominium developer, had added 500 million baht to its initial budget so it could acquire the plot to develop mid-priced townhouses and middle- to low-end condominiums.

He said the 50-plus rai were located near a new mass transit line. The company is in talks with the owners and would finalise the deal within this month. The plot would likely cost more than 500 million baht.

“This is the first time we have shifted to a low-rise project,” he said.

“It will change our development model as we will use the concept of a small township with townhouses, condominiums and some retail space.” The project, to be developed by its subsidiary Porn Santi Co, would be launched in many phases.

The company’s investment in the large plot would be an advantage as it would not have to compete on price developers who were unable to make such a big investment, he said.

Despite the shift to low-rise development, LPN would maintain pole position in the condo market. It aims to transfer 7,000 to 8,000 units this year and more than 10,000 units in the future.

LPN accounted for 20% of the 33,300 condo units registered last year, followed by Asian Property Development (8%), Areeya (7%), Pruksa (6%), Sansiri (5%) and Supalai (4%).

Non-listed firms accounted for about 41% of the market.

LPN on March 20 plans to launch two new condo projects worth a combined 4.4 billion baht and targeted sales of 4 billion baht by the month’s end.

One project is in the Kluay Nam Thai area on Rama IV Road with 887 units worth 1.5 billion baht. The other is in the Ratchayothin area with 1,827 units worth 2.9 billion baht.

During the first five weeks of the year, LPN recorded one billion baht in presales. It expects a total of 5 billion baht during the first quarter.

Revenue realised in the first quarter would decline from previous quarters due to a lack of transfers resulting from a change in the business plan in the second half of 2008, he said.

“We delayed launching new projects from the second half [of 2008] to the second quarter of 2009 due to unfavourable sentiment so the revenue-booking plan is affected this year, like a ping-pong effect with ups and downs,” said Mr Opas.

LPN would have higher revenue of about 2.5 billion baht, 1.5 billion and 4 billion in the second, third and fourth quarters respectively.

The projected figures for the last quarter this year would be the highest revenue in LPN’s history.

Mr Opas said the end of the property tax incentives this year would take three percentage points off its net profit margin, which stood at 17% last year.

The company targeted to achieve 13 billion baht in presales and 9.6 billion baht in revenue in 2010.

Currently, it had a sales backlog of 10.5 billion baht – 7.22 billion being realised this year and the rest in 2011. LPN reported consolidated net profit of 1.358 billion baht for 2009, up 12.71% year-on-year, on total revenues of 8.51 billion, a 17.86% increase.

LPN shares closed yesterday on the Stock Exchange of Thailand at 7.05 baht, down five satang, in trade worth 42 million baht.

SOURCE: bangkok Post