Message from the Board of Directors

The Thai economy took off slowly in 2017 and showed a clear recovery sign in the second half thanks to the unexpected export growth and continued prosperity of the tourism industry. However, the overall environment was not supportive to business expansion. The government’s stimulus package for the property industry implemented late 2015 until early 2016 sucked out “future housing demand” leading to a slowdown in both supply and demand. The industry was also battered by the persistently high household debt and commercial banks’ stringent lending criteria while the loan rejection rate remained as high as 30-40%.

In 2017, the Company and subsidiaries posted a 7% increase in revenue, at Bt16,730.71 million. Of total, the property development business generated Bt13,445.76 million, or a 7.9% increase from the previous year. The hotel business came second, contributing Bt2,323.28 million or an increase by 5.9%. Rent and service fees decreased by 4.7% to Bt344.14 million. Meanwhile, land sale generated Bt1,225.45 million, the construction business contributed Bt32.47 million and the sale of land purchase rights and liquidation of investment in joint ventures showed a gain of Bt211.81 million. Other revenues were valued at Bt373.25 million. The Company and subsidiaries launched 15 new projects with combined value of Bt14,626.50 million, consisting of 12 low-rise projects worth Bt11,769.00 million and 3 high-rise projects worth Bt2,857.50 million.

To ride out the storms in 2017, the Board of Directors set sight to continually grow business through a greater focus on the premium segment, which was not subjected to commercial banks’ stringent lending criteria. This boosted revenue from the segment by 16%. Meanwhile, Sheraton Hua Hin Resort and Spa real estate investment trust (GAHREIT) was established as the first REIT since the Company’s acquisition of TPROP and GRAND in 2015 at the value of Bt1,755 million. It was satisfactory that the Company’s debt was reduced by Bt2,144 million in 2017, ably bringing down the debt to equity ratio from 1.96:1 to the target level of 1.58:1

In 2018, the Board of Directors strives to continually strengthen the Company’s operations, in terms of revenue, earnings and debt burden. Moreover, it seeks to further seek world-class foreign partners’ supports in growing revenue from core businesses. To grow the property development business, the Company plans to launch 25 new projects with combined value of Bt35,823 million, consisting of 21 low-rise projects worth Bt25.543 million and 4 high-rise projects worth Bt10,280 million. One of the condominium projects is undertaken jointly with Sumitomo Forestry Company Ltd, a leading player in Japan’s forestry and residential industry. Grand Star Company Limited was established as a joint venture with Sumitomo Forestry to develop a very luxury condominium in Thong Lor area worth Bt6,000 million. Some of the low-rise projects will carry a new brand, Perfect Residence, highlighting single houses priced at Bt10-Bt15 million per unit. The Company also plans to launch a high-end housing project with a Hong Kong real estate company, to raise the market share in the premium segment.

Another plan is to stabilize the revenue from the hotel business, to reduce risks from excessive dependence on a particular business. The hotel portfolio will be expanded to cover new properties which include Hyatt Regency Bangkok Sukhumvit, a property with 273 rooms. A plan is set to acquire Royal Orchid (Thailand) Company Limited which operates the 726-room Royal Orchid Sheraton Hotel. These will increase the number of hotels in the portfolio from 4 to 6, boosting the number of rooms from 1,078 to 2,077. REITs are eyed to invest in these properties. Meanwhile the properties will be managed by Marriott and Hyatt, the world’s best and largest hotel management firms. While the Company will benefit from Marriott’s Loyalty Members which number more than 100 million across the world, it will gain from Hyatt’s strength as the world’s best management firm in terms of F&B. On top of that, the Company plans a mixed-use project in Rayong, consisting of residential villas, a condominium and a hotel or resort, to take advantage of the Eastern Economic Corridor (EEC) scheme. Regarding the plan to turn around Kiroro Resort’s operations, the Board of Directors expects to conclude the negotiation with a world-class company which is keen in managing ski fields, mountain hotels and mountain tourism. The partner’s strength is believed to help boost the number of visitors to Kiroro Resort and hence boost its revenue. The turnaround will pave way for residential development, be they a housing estate or a condominium project.

On behalf of the Board of Directors, I hereby wish to extend my heartfelt thanks to our shareholders, valued customers, investors, trade partners, allies and financial institutions for their continued supports to the Company. My appreciation is extended to all executives and employees who performed their duties with patience and dedication throughout the past year.

Dr.Tawatchai Nakhata

Mr.Chainid Adhyanasakul
Chief Executive Officer