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Thailand Property Outlook – Slower pre-sales to press FY2014 Profit

By on Jan 14, 2014 in Property News

The current Thai political conflict, started since November 2013, is not likely to end in near future, pressing consumers’ confidence.  Moreover, household debt to GDP continues increasing, lowering purchasing power and housing loans.  The launching of new projects has been slowed down in late-2013 and early-2014, waiting for the political unrest to relieve. Thus, presales of 15 companies under our coverage would make the lowest in 4Q13-1Q14, after declining for two quarters (from B75bn in 1Q13 to B61bn in 2Q13 and B56bn in 3Q13).

We revise down FY2014 GDP growth forecast from 4.3%yoy to 3.3%yoy, likely to affect consumers’ decision on purchasing a new house. For companies with small backlog to be transferred in 2014, mainly those with most income from horizontal projects (e.g. LH, QH, PS), their FY2014 profit would be affected severely, as they would need to sell new houses to recognize income. Companies with massive backlog to recognize income in 2014 are mostly those with condominiums that were launched few years ago (e.g. SPALI, AP). We revise down the sector’s FY2014 income forecast by 9.7% to B218bn, cutting ready-to-be-transferred horizontal project sales from the previous forecast. Thus, FY2014 net profit forecast is revised down by 7.4% to B31bn, growing by 15.8% as B100bn backlog from B280bn backlog needs to be transferred in 2014.

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