The earnings of Mr. Charoen Sirivadhanabhakdi’s Asset World Corp Public Company Limited (AWC) at a net loss of 1,881 million baht in 2020 was not a surprise as investors already anticipated this kind of losses due to the coronavirus impact.
Still, AWC is a company under “Sirivadhanabhakdi Family”, the net loss in 2020 would not be a big concern in an overall outlook.
More importantly, the highlight would be the acquisition of a 14-story and 287-rooms hotel, Sigma Resort Hotel Jomtien Pattaya, from APEX Development Public Company Limited (APEX) with a total investment of 550 million baht.
The investment was in line with AWC’s strategic plan to seek and purchase hotel businesses that have difficulty in maintaining liquidity during Covid-19 outbreak with a budget over 10 billion baht. The acquisition of Sigma Resort Hotel Jomtien Pattaya marks the first deal of AWC’s plan.
This would be the opportunity for AWC to acquire quality assets at a cheaper price, while the company still has high purchasing power from the IPO funding. AWC only needs the Covid-19 situation to relax and tourism to return close to normal in order to fully capitalize these asset acquisitions.
When tourism makes its return Pattaya should be one of the first spots to host travellers, which is why the acquisition of Sigma Resort Hotel Jomtien Pattaya, located near Jomtien beach, is a brilliant move by AWC.
As for APEX, the company might be in need of funding to start something new. The company currently is struggling with its balance sheet that could not bottomline a net profit. In 2017, APEX reported a net loss of 113 million baht from a revenue of 345 million baht. In 2018, the company recorded a net loss of 302 million baht from a revenue of 211 million baht. And in 2019, the company announced a net loss of 421 million baht from a revenue of 98 million baht. As for 9M20, APEX recorded a net loss of 206 million baht from a revenue of 662 million baht.
APEX had cash and cash equivalents of 8.69 million baht as of the ending of September 2020, while having a liabilities of 3,289 million baht and total assets of 3,262 million baht, which led to a contraction of 27.38 million baht in shareholding equity.
This asset disposition could prolong the company’s business for a period of time. However, if the Covid-19 situation drags on, Sigma Resort Hotel Jomtien Pattaya may not be the only asset getting disposed of.
On the other hand, AWC who has a good backup squad as the “Sirivadhanabhakdi Family” could start renovating acquired hotels, waiting for the day to emerge from travel restriction, while looking for more businesses to take over.