LH – The Most Profitable Property Developer in 2018 to Maintain #1 amid Business Slowdown

Kaohoon has made a survey of listed companies in the property development sector to see the most profitable company in 2018. As expected, Land and Houses Public Company Limited (LH) stood at the top among other developers again this year. In 2018, LH booked THB 10,475.43 million of profit, grew 0.11% YoY mainly due to the earning from selling property in the US to book a profit of THB 1,335 million.

Pruksa Holding Public Company Limited (PSH) trailed LH at number two ranking to earn THB 6.022.37 of profit, increased 10.40% YoY. Supalai Public Company Limited (SPALI) was ranked third in the sector who recorded a profit of THB 5,770.42 million, decreased 0.74% YoY. AP (Thailand) Public Company Limited (AP) came in the fourth place with THB 3,865.41 million or profit, grew 22.44%, and the fifth place was taken by Quality Houses Public Company Limited (QH) along with its net profit at THB 3,801 million, increased 10%.

 

As for the operation in 2019, LH tends to have constant growth due to its recurring income from the recent initiation of Terminal 21 and Grande Centre Point Pattaya in late 2018. To make the profit in a different channel, LH will earn profit from shares holding of listed companies such as HMPRO, LHFG, QH and LHPF I&II as well.

Moreover, the company plans to debut 16 more linear projects in 2019. The total amount of these projects is THB 30,000 million, which is 30% higher than the previous year. LH sets a pre-sales target at THB 33,000 million, increased 10% YoY.

However, LH did post a lower gross profit ratio at 31-33%, decreased from 36.4% in 2018 as condominium subscription in 2019 tends to decline. On the other hand, the company expects lower SG&A expenses at 11-13%, decreased by 13.6% YoY due to the improvement of LH’s management.

 

What needs to be worried is that the business in property development is currently in a downturn. It is inevitable that companies in this sector must find a recurring income in case its core business tanked. Most property developers choose to invest in other businesses for diversification. For example, M.K. Real Estate Development Public Company Limited (MK) and Raimon Land Public Company Limited (RML) just recently started its Health and Wellness business, while Ananda Development Public Company Limited (ANAN) started its serviced apartment business.

In the end, the difference in profit and the leading position in the property development sector may be decided by recurring income of each company. Does LH have enough recurring income to keep it at the top?