J.S.P. plans debut in upper-end residences
Developer hopes to raise net profit margin
MAI-listed developer J.S.P. Property Plc will enter the upper-end residential market next year and raise housing prices by 5-10% to improve its net profit margin from 0.9% in the third quarter this year to more than 10% in 2018.
Managing director Pairoj Wattanavarodom said the company will focus on improving net profit margin next year with the launch of duplex and single detached houses in the upper-end segment, with units priced from 12.9 million baht and 35 million baht, respectively.
“Products in the higher-end market can improve net profit margins,” Mr Pairoj said. “We expect to have a net profit margin of at least 10% next year and sustain it from 2019 onwards.”
The upper-end duplex and detached houses will be located on a 9.5-rai site on Kalapapruek Road, where 46 units worth 700 million baht will be developed.
J.S.P. is also bullish on eastern Bangkok and locations in eastern provinces such as King Kaew in Samut Prakan, Bang Pakong in Chachoengsao and Sri Racha in Chon Buri.
In Bang Saray of Sattahip district in Chon Buri, the company will launch a joint venture project with Chinese contractor Zhongtian Construction Group to build single detached houses priced from 5 million baht a unit.
Chief financial officer Sithipon Ratanaporn said the company’s net profit margin as of the third quarter 2017 was 0.9%, shrinking from 7.2% in the same period last year, largely due to losses in rental properties.
J.S.P. has rental spaces at two projects: Sampeng 2 on Kalapapruek Road and Miami Bangpu in Muang Samut Prakan.
At Sampeng 2, which opened two years ago, the occupancy rate was 80% but rental rates were only 250 baht per square metre per month, 50% below a target of 500 baht as the company used low-priced offers to attract tenants.
Rental rates at Miami Bangpu were better at 600-1,000 baht per sq m per month, but occupancy rate was 60% below target, Mr Sithipon said.
“To help improve net profit next year, we plan to sell more land at the Bangpu site, where land prices rose to 20-25 million baht per rai from the 5-6 million baht we paid years ago,” he said.
In the fourth quarter this year, the company will book 178 million baht in revenue from the sale of a six-rai plot at the Bangpu site. With this income, the company expects net profit to improve to 5% by year-end.
Mr Sithipon said the company will issue bonds of up to 1.2 billion baht in January 2018 and 1 billion baht in the second half of 2018, with maturity of 2½-3 years, to repay short-term loans. Cost of funds will drop to 5% from 6-7%.
In 2018, J.S.P. plans to spend 2 billion baht to buy new plots and 3 billion baht for property development. It aims to have 5.2 billion baht in presales by the end of next year, up from a target of 4.5 billion baht this year and 3 billion baht last year.
As of the end of September, J.S.P. had a sales backlog of around 4 billion baht. Of
the amount, 1.5 billion baht will be realised in the fourth quarter and the rest next year.
JSP shares closed yesterday on the Market for Alternative Investment at 78 satang, up two satang, in trade worth 4.52 million baht.