LPN Development Plc is moving up to higher segments from the affordable condominium sector it has been well-entrenched in for years after high household debts rocked the lower levels.
In a frank press conference at Siam Kempinski Hotel this afternoon (Jan. 30), the respected listed company’s CEO Tikhamporn Plengsrisuk said that to resolve a problem one first has to admit that it exits and not try to hide it because hidden it will not be resolved.
“Although our income dropped the company is still showing a profit so it’s not in that bad a shape but I don’t want to say our company is not in a bad shape because doing so makes it difficult to get up and resolve problems.”
LPN said that household debts stand at 82% of gross national product (GDP) during 2016-2017 while property purchase cancellations will rise from 10% in 2016 to 20% in 2017. At the same time loan rejection rate will climb from 10% in 2016 to 30% in 2017.
Opas Sripayak, LPN’s managing director, said that his company tried to stick to building good quality housing for mid- to low-end buyers priced around 1 million baht but can no longer do just that.
“We can’t resist change anymore and we have to move from affordable condo level to affordable city condo.
“We have already made this adjustment, this past weekend we launched two projects in Makkasan and Bangna (Lumpini Suite Petchburi-Makasan and Lumpini Place Bangna Kilometer 3)… so we have moved closer to the city center.”
LPN’s latest two projects are also smaller than some of its recent projects where there have been 1,000 and even up to 10,000 units with these having 500 to 600 units.
“We have moved up and are not tied to 1 million baht condos and buying land at 100,000 baht a square wah – now we also buy land at 600,000 baht a square wah.
“But in moving to the upper market LPN has to adjust its brand image because this is important at upper levels.”
Mr Opas said he had two missions this year with one being to clear his company’s inventory and if he is successful by the end of this year it should dwindle sharply.
This then leads to the second mission which is to build up backlog to increase income stream and while LPN’s backlog at the beginning of the year stood at 1.5 billion baht the two newly launched projects has raised it to 3 billion baht.
In 2016 LPN sales reached 8.5 billion baht with revenue from sales totaling 13 billion baht. In keeping with its key shift 7 of 12 projects being launched this year will be positioned in the mid to upper end of the market with the value being 16 billion baht and sales target 20 billion baht.
Meanwhile Mr Tikhamporn mentioned that LPN’s key shift also applies to its four subsidiaries with these being Pornsanti Company (PST) which develops low-rises and three service companies namely Lumpini Property Service and Care Company (LPC), Lumpini Property Management Company (LPP) and Lumpini Project Management Service Company (LPS).
LPS will be transforming itself from managing construction work solely for LPN to reaching out and offering turnkey property service to outside parties.
Top: LPN’s top executives together with those of its subsidiaries at today’s press conference in Siam Kempinski Hotel.
First inset: LPN CEO Tikhamporn says it’s best not to hide problems.
By Nina Suebsukcharoen