SINGHA Estate, the property arm of beverage firm Singha Corporation, plans to invest Bt16.5 billion to take over assets, for merger and acquisition of three businesses, and development of a condominium project in the remaining months of this year to boost 2015 revenue to Bt4 billion.
This is a part of its business plan to acquire a major stake and assets in other property firms through M&A, and acquire land for developing residential projects worth Bt77.5 billion in Thailand and overseas, especially in Asean countries between now and 2017.
A budget of Bt4 billion out of the total Bt16.5 billion will be used this year to acquire assets from property firms. This deal will be reported to the Stock Exchange of Thailand next week. A total of Bt8 billion will budgeted for M&A of two property firms, which will develop hotels in the fourth quarter of this year.
The balance, Bt4.5 billion, will be deployed to develop a luxury condominium project on Asoke Road in Bangkok, close to Singha Complex, which will be launched next month, chief executive officer Naris Cheyklin said yesterday.
The company is planning investments of Bt60 billion in 2016-17, with Bt20 billion each year allocated for M&A of property businesses, and Bt10 billion each year to develop an average of four residential projects a year.
“They are a part of our strategy to boost our revenue to Bt20 billion by 2019, with about 60 per cent of revenue coming from sale of residential projects and 40 per cent from recurring income. Our gross profit margin will average 35 per cent in 2019,” he said.
He added that the company’s investment plan would focus on the property business in Thailand, which would include hotel, office, retail, and residential projects, as well as overseas, especially Asean countries, where it will focus on hotels and offices once the Asean Economic Community becomes effective at the end of this year.
The funding for the investment will come from four sources – the company’s cash flow, bank loans, increases in capital, and issuing a real estate investment trust.
“We will not increase our new capital this year because the company has already secured Bt2.45 billion cash from a rights offering in June. But we will consider raising capital from the capital market in the next two or three years depending on the need for cash for investment,” Naris said.
After aggressive investment through 2017, the company will maintain its debt-to-equity ratio at not over 1.2:1. Currently, the ratio is 0.3:1. It will be 0.7:1 at the end of this year after its three new M&As are completed, chief financial officer Methee Vinichbutr said.
He added that after the three deals are completed, they would drive its revenue to Bt4 billion this year. Singha Estate posted a net loss of Bt27.56 million in the first quarter on total revenue of Bt322.68 million.
Meanwhile, the company is targeting revenue of Bt6 billion in 2016. The revenue will come from its two hotels – Santiburi Hotel and Phi Phi Island Village – and dividends from its subsidiaries such as Nirvana Development Co, in which Singha Estate has held a 51-per-cent stake since April 28, and a new business whose deal will be completed by the end of this year, Methee said.