By Nikki De Guzman:
Revenues of listed firms increased in Q1 2013 by 10 percent to 20 percent compared to the same period last year, due to rising demand for residential properties, reported The Nation.
However, most posted a lower net profit on a year-on-year basis due to higher marketing and construction costs, given the highly competitive market.
For instance, the net profit margin of Pruksa Real Estate fell to 12 percent compared to between 15 to 16 percent last year, while Sansiri suffered a net loss in Q1 2013 compared to a net profit margin of nine to 10 percent last year.
In contrast, Land & Houses recorded a margin of 23 percent, although some of its net profit came from its investment business. Comparatively, the industry average for 2012 is 15 percent.
Moreover, developers’ inventory — a mixture of undeveloped land and ongoing projects — rose in Q1 2013 compared to Q4 2012, as most of these companies expanded their investments and unveiled more projects in Bangkok and other provinces.
As of 31 March, Pruksa’s inventory of THB41.79 billion was the highest among listed real estate firms, followed by Sansiri with THB38.03 billion and Land & Houses at THB34.57 billion.
However, the business expansion and high inventory levels have increased the debt-to-equity (D/E) ratio of property firms that have prioritized condo projects to more than 2:1.
Noble Development’s D/E ratio is at 2.6:1, Sansiri with 2.2:1 and Property Perfect at 2.1:1. Comparatively, a ratio of 1.5:1 is the average for listed real estate firms.
Furthermore, the D/E ratio of some property firms, such as Pruksa, did not exceed 1.5:1 as they balanced their projects between condominiums and low-rise housing.
Nikki De Guzman, Junior Reporter at PropertyGuru, wrote this story. To contact her about this or other stories email nikki@allproperty.com.sg
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