Message from the Board of Directors

Year 2016 will be forever remembered following the departure of HM King Bhumibol Adulyadej (King Rama IX) on 13 October 2016. On behalf of Property Perfect Public Company Limited, I wish to express our loyalty and respects to the much-revered monarch who had long been the center of Thais’ hearts.

In 2016, the economic condition as a whole was unfavorable to the business sector, as household debt remained high while financial institutions imposed stringent measures on mortgage loan applications, resulting in the rejection of about 30-40% of the applications. Meanwhile, the stimulus measures to boost the property sector launched late 2015 and continued through the first quarter of 2016 simply accelerated the decision pace without creating chain effects. To developers, the measures were a tool to release the inventory rather than an incentive for new projects. When the measures ended, demand apparently dropped in the second quarter. Demand picked up in the third quarter but later faltered as the whole country was grieving the unexpected departure of King Bhumibol Adulyadej. The launch of new projects and marketing activities were postponed while consumers delayed their purchase decisions. Throughout the year, the number of newly-launched units managed to increase by 2% from the previous year, mostly due to low-rise units which jumped by 16% against a 7% decrease in the number of condominium units as a result of delayed launch of new projects.

The aforementioned factors affected the Company’s launch plan as well. In 2016, the Company unveiled 8 projects with combined value of Bt7,980 million (7 low-rise projects worth Bt6,580 million and 1 condominium project worth Bt1,400 million), against the planned launch of 18 projects worth Bt18,180 million. This pushed down the annualized sale revenue by 19% to Bt10,757 million: 66% generated by single houses and townhouses and 34% by condominium units. However, the property development business showed a 16% increase in revenue to Bt12,465 million, mainly due to the 59% increase in revenue from the condominium segment which generated Bt4,988 million. The increase was partly attributable to the realization of revenue from 3 condominium projects - Metroluxe Phaholyothin, Metroluxe Kaset and Metroluxe Riverfront. In contrast, the transfers of single houses and townhouses decreased by 4% to Bt6,614 million. Other revenue came from the sale of land worth Bt864 million Bt2,194 from the hotel business, Bt361 million from the rental and service business and Bt89 million from the construction service business. The Company’s total revenue thus grew 21% on year to Bt15,553 million, and the net profit margin is 2.1% in 2016 close to 2015.

The Board of Directors also achieved its goals in maintaining revenue growth; outlining the clear business plan for the property development business and the plan to turn the GRAND hotels into leading properties; developing mixed-use residential and hotel/resort projects; and establishing a real estate investment trust for the hotel business. Meanwhile, though Kiroro, a hotel in Japan, still showed a loss in 2016, the development plans are being carried out to ensure profitability in the future.

The Board of Directors sets out the 3 following strategies for 2017:

  • Raising capital to strengthen the capital base ahead of investment expansion and be prepared for uncontrollable external factors. The Company is raising the capital through the issuance of 1,300 million shares and perpetual subordinated bonds worth no more than Bt2,000 million. Meanwhile, GRAND has raised capital by issuing 2,110 million shares.
  • Growing revenue by raising the revenue ratio from premium products, particularly single houses priced Bt20 million or more. The Company also plans to launch 16 new projects with the combined value of Bt22,190 million; 11 single house and townhouse projects worth Bt14,252 million and 5 condominium projects worth Bt7,938 million. GRAND will focus on premium condominiums in CBD areas and luxury villas. With backlog worth Bt2,100 million, it will transfer the completed units in the Hyde project in the fourth quarter of 2017. It will also open Hyatt Regency Sukhumvit Hotel late 2017 and establish a real estate investment trust for the hotel business.
  • Enhance profitability by increasing the efficiency of operations, financial cost management, and expense control, with the main goal to improve the Company’s rating.
  • The ongoing talks on domestic and foreign partnership, to strengthen core businesses, should be concluded in 2017. Meanwhile, Kiroro should reach a break-even point and show profits, through the promotion of both hotel property and ski activities to a wider scale of potential customers following renovation in the past two years. These should sustain the Company’s revenue and profit expansion.

    On behalf of the Board of Directors, I hereby thank all shareholders, customers, investors, business partners, business allies and financial institutions which have shown their supports to the Company, as well as executives and employees for their patience and dedication in the past year.

    Dr.Tawatchai Nakhata

    Mr.Chainid Adhyanasakul
    Chief Executive Officer