In 2023, the real estate market faced various constraints. The economic growth rate was 1.8%, lower than the 3% growth estimated by the Bank of Thailand, as a result of a slowdown in export sector. The tourism sector did not grow according to plan. The government spending and investment decreased, when compared to 2022, since it was not possible to disburse the fiscal year 2024 budget in the last quarter of 2023 due to the delay in the formation of government (FY 2024 annual Budget starting from October 2023-September 2024). The private sector spending and investment slowed down. The Bank of Thailand ended the easing of the Loan to Value (LTV) from 1 January 2023 onward by which directly affected the real estate sector, especially causing the decline in housing purchasing power in 2023.
Under such circumstances, real estate developers had to adjust their business strategies to correspond with incurring situations. L.P.N. Development Public Company Limited (LPN) also had to revise its business plan and drive the organization toward resilience in response to the incurring situations.
In 2023, LPN has applied cost management practices in response to the rising construction costs caused by prices of lands and construction materials that rose along with energy prices, inflation and higher interest rates in 2023. Both financial cost management and construction cost management were implemented in order to develop projects at a reasonable price, in line with existing purchasing power in the market while maintaining targeted profitability.
At the same time, LPN launched eleven new projects with a combined value of 11.725 billion baht. Two of them are residential condominium projects with a combined value of 3.975 billion baht, namely Park 168 Nopparat Ramindra and EARN by L.P.N. at Amata Industrial Estate in Chonburi. Nine are residential home projects with a combined value of 7.75 billion baht including premium home projects namely Maison 168 Muangthong, Residence 168 Ratchaphruek, and Villa 168 Westgate, single home and semi-detached home projects namely Haus 24 Ratchaphruek, Haus 24 Khukhot Station, Haus 24 Westgate, Haus 24 Kaew In and Haus 24 ฺBang Yai and lastly a townhome project namely Venue 24 Prachauthit 90. This was done in response to weakening tendency of purchasing power in the market in 2023, compared to 2022, as the economy tended to slow down. In addition, the end of the loan to Value (LTV) relaxation on 1 January 2023 had a direct impact on the decision to buy residential units as well as to approve housing loans. According to a report of the Bank of Thailand, the average approval rate of housing loans only accounted for 30-40% of the total amount of loans applied for approval in 2023.
Adjustment of Sales and Revenue Targets
At the same time, LPN had adjusted its sales and revenue projection in response to the economic situation and the weakening purchasing power. In 2023 the Company’s total sales were 9.966 billion baht. Sales of residential condominium projects were 8.115 billion baht. Sales of residential home projects were 1.851 billion baht. Thus, total revenue in 2023 was 7.44448 billion baht, decreasing by 27.7% from 10.30076 billion baht in 2022, since the Company had an unearned income from the sale of an office building, worth 2.5894 billion baht. The total revenue included 5.10343-billion-baht revenue from residential property sales and 2.30364 billion baht revenue from project management, rental business and service business. The net profit was 364.42 million baht, decreasing by 40.5% when compared to 2022. The total backlog from residential condominium projects and residential home projects was 2.339 billion baht which will gradually be recognized in 2024-2026.
In 2023, nine projects, with an approximated combined value of 9.93 billion baht, were completed and ready to be handed over, including two residential condominium projects and seven residential home projects as follows.
Residential condominium projects with an approximate combined value of 4.27 billion baht included
Residential home projects with an approximate value of 5.66 billion THB included
Cost Management and Cost Reduction to Increase Work Efficiency
LPN developed a cost reduction plan by bringing in digital transformation to help increasing efficiency of all operating segments, generating more recurring income from existing assets, e.g. renting out condominium units that were for sale; enhancing the financial liquidity by carefully managing cash flow to ensure that it would be sufficient for the business operation for no less than 6 months; eliminating unnecessary expenses; as well as speeding up the construction of projects with purchasing volumes so that they are completed and handed over to customers as planned.
At the same time, in 2023, the Company invested in purchasing land plots for the development of residential projects from 2023-2026 with a combined value of 1.74396 billion baht. Such investment led to an increase in the Company’s debt, resulting in a total debt burden of 14.62478 billion baht, increasing 19.4%, compared to 2022. The incurred debt caused the interest-bearing debt to equity ratio and the debt-to-equity ratio to rise from 0.89:1 in 2022 to 1.06:1 in 2023 and from 1.03:1 in 2022 to 1.22:1 as at 31 December 2023. The Company still upheld the financial discipline, maintained a debt equity ratio of not more than 1:1 according to the Company’s policy as well as kept the investment portfolio balanced for future growth.
Taking care of stakeholders and being socially accountable
Since employees have been the heart and engine of the organization, LPN has had an approach to take care of employees by encouraging them and providing them opportunities to learn new technology and innovation. It also supported a balanced work style under the Work-Life Balance concept, allowing employees to Work from Home as well as Work from Anyplace to create balance between work and life. Moreover, the internal measure to cope with the spread of COVID-19 was still maintained. The Company also took care of co-owners of the Company-managed communities by strictly implementing various measures that had been formulated from 2000 to today.
In addition, the Company has continued to focus on social care through L.P.C. Social Enterprise Co., Ltd., a subsidiary company that creates job opportunities for underprivileged women and elderly people. The Company employed 1,680 underprivileged women and elderly people with an aim to employ and create opportunities for at least 2,000 underprivileged women and elderly people in 2025.
From the business plan adjustment and the performances in 2023, the Board of Directors’ Meeting No. 1/2024 held on 15 February 2024 resolved to approve an annual dividend for fiscal year 2023 of 0.13 baht per share. On 3 August 2023, the Company paid an interim dividend of 0.08 baht per share. The remaining dividend to be paid is 0.05 baht per share. The ex-dividend date (XD) was fixed on the 28 February 2024 and the record date was set on 29 February 2024. The dividend is payable on 17 April 2024.