WHA READY TO COVER ALL LOGISTICS BASES
WHA Corporation Plc is the leader in premium built-to-suit warehouse, distribution centre and factory development in Thailand and the region. Somyos Anantaprayoon, president and chief executive, and managing director Jareeporn Anantaprayoon discuss the company’s strategy and outlook.
Please explain WHA’s history.
WHA began in 2003 with the vision to be a leader in built-to-suit modern warehouses and distribution centres. We saw that Thailand’s logistics cost to GDP was very high at 18% and that there was an opportunity to help the country and the industry to reduce the cost.
We began with one warehouse and today have nearly 2 million square metres of developed and available land with more than 90% utilisation. We have gained recognition from leading multinationals and large Thai conglomerates for helping to improve their logistics and operations with our total solutions.
What is WHA’s business model?
Our business model focuses on recurring income from long-term leases and service agreements of our properties. After incubating our assets for a period of time, WHA monetises them by annually selling some mature assets to our WHA Premium Growth Freehold and Leasehold Real Estate Investment Trust (WHART), our SET-listed REIT. This allows us to generate high profits for our shareholders with a limited amount of capital, low risk and still maintain ownership.
The other business model we utilise is sale and long-term leaseback, which helps our clients to minimise initial investment costs, minimises tax payments and increases asset utilisation.
What differentiates WHA from its competitors?
There are several factors including our expertise in logistics design, meeting 100% built-to-suit requirements, worldclass quality, continuous R&D and a very flexible business model. WHA has its own in-house logistics design experts with in-depth knowledge of product storage methodologies and cost minimisation. Our clients consider us their partners; hence our motto “Better Together, Better to Greatest.”
Who are WHA’s customers?
Broadly speaking, our customers are the largest global consumer goods producers, healthcare and medical companies, third-party logistics operators, and medium- to high-technology manufacturers and industrial factories. More than 80% are international clients and the rest are large Thai companies with long-term leases.
WHA has been acquiring assets, notably the industrial estate and utilities provider Hemaraj Land and Development Plc (HEMRAJ). Please explain the strategy.
Our aim is to expand further on builtto-suit assets and increase our recurring income from long-term lease assets that will appreciate in value. This is why we acquired the SJ Infinite Business Complex and why we built the Bang Na Business Complex for built-to-suit purposes.
The acquisition of Hemaraj completes WHA’s vision to cover all areas as a logistics, production and utilities hub. Hemaraj accounts for 40% of all the industrial land sold per year in Thailand and has a land bank of 11,000 rai that can be provided to WHA’s international clients for more than five years.
Hemaraj also has a high portion of recurring income with 60% from water sales, wastewater treatment and electricity sales to its clients and the government. Finally, Hemaraj has a ready-built logistics park of 600,000 sq m.
What are the biggest risks facing your business?
The key risks relate to global economic growth, regional infrastructure, lack of domestic infrastructure investment and domestic politics. The global economy and currency volatility may have an adverse impact on demand, and the infrastructure for the Asean Economic Community (AEC) still has to be improved which will require high investment.
Importantly, Thailand has issues with water supply which affects the agricultural sector. The current water crisis will decrease consumer purchasing power and result in GDP falling by 1-2%. Thankfully, however, the domestic political situation has improved with more stability.
What impact will the AEC have on your business?
We see that Thailand is the inland logistics centre for the region with direct land access to a population of 300 million. With the improvement of infrastructure throughout the country and the region, we expect a huge increase in demand which will have a strong positive impact for WHA’s businesses.
We will look throughout the region for opportunities and be selective depending on our clients’ needs as each country is at a different stage of development. For example, Vietnam already has industrial estates but is lacking in logistics while Myanmar lacks both industrial estate development and logistics. Thus we see several opportunities to expand in the logistics sector for many decades.
Where do you see WHA in five years?
The four key hubs that we will focus on are logistics, industrial estates, utilities and power, and digital services. Our aim is to ensure that we are a world-class standard solution provider to our clients and that we are able to anticipate and accommodate their needs.
Internally we are ensuring that our management teams are strong, capable and continually innovating new solutions for our clients, and that our shareholders over the long term will see the benefits to Thailand, the industry and WHA.