Hemaraj sticks by growth forecast : Autos, chemicals still show demand

Hemaraj sticks by growth forecast : Autos, chemicals still show demand.

BUSRIN TREERAPONGPICHIT

Hemaraj Land and Development Plc, the country's largest industrial property developer, expects to post modest revenue growth this year despite the difficult economic situation, according to chief executive David Nardone. He said the company's performance would be helped by industries such as automobiles and petrochemicals which still have strong growth potential.

''The current circumstance is just a small disruption,'' he said, referring to recent developments such as the Bangkok bombings, capital controls and changes in the Foreign Business Act.

As a result, he said, Hemaraj remained committed to its capital expenditure plan worth about two billion baht this year.

Hemaraj predicts its revenue will reach five billion baht this year, driven by an estimated 52 land purchase contracts, up slightly from last year. Half of the contracts are expected to be with existing clients that want to expand.

''I see no worry for the country so far since Thailand's economic fundamentals are still good. Only the domestic market will shrink slightly but but it will not affect export-oriented businesses and most manufacturing producers,'' he said.

Hemaraj posted a net profit of 194.2 million baht in the third quarter of 2006, an increase of 72% from the same period of 2005. Net profit in the first nine months of 2006 doubled year-on-year to 825.1 million baht, due mainly to revenue realised from The Park Chidlom, a luxury condominium, and industrial-estate utilities revenue.

Hemaraj sold 712 rai of land in 2006, representing 49 purchase contracts.

Mr Nardone also said the company would not be affected by amendments to the FBA because it had Board of Investment promotion.

With 40-50% of its total revenues from the Bangkok luxury condominium that is now almost fully booked, the company's performance has been better than that of other industrial estate developers

Hemaraj also aims to win at least one independent power producer (IPP) licence when bids are called in March. The company will form a partnership with SET-listed Glow Energy Plc to enter the auction.

Hemaraj expects to hold between 35% and 50% for the planned joint investment worth 15 billion baht to construct a 700-megawatt gas-turbine power plant.

''We are not worried about the funding of the investment,'' said Mr Nardone. ''Considering our low debt-to-equity ratio of only 0.2 times, it's comfortable for us to raise fund by borrowing,.''

However, the company might scrap its earlier plan to issue debentures worth between 1.5 billion and two billion baht, as investor interest could be affected by the new capital control measures of the Bank of Thailand, said Mr Nardone.

The alternative is to borrow from local financial institutions.

Hemaraj yesterday signed land purchase agreements with the Korean auto parts maker Hanil Forging Co, which is acquiring 18 rai of land at the Hemaraj Eastern Seaboard Industrial Estate.

Sang-Kyu Lee, Hanil's chief executive, said Thailand remained among the best production bases in the world, as the large number of automotive supporting industries helped attract even more auto parts and assembly ventures to enter Thailand.

Hemaraj shares (HEMRAJ) closed yesterday on the Stock Exchange of Thailand at 81 satang, unchanged, in trade worth 20.86 million baht.

Bangkok Post
Sunday January 14, 2007