Thai condo developer LPN's Q3 tumbles on weak demand

[BANGKOK] LPN Development Pcl, Thailand's biggest condominium developer, on Thursday posted a nearly 70 per cent plunge in quarterly net profit, hit by lower revenue and weak margins as the sector is grappling with weak demand in a sluggish economy.

LPN said a drop in purchasing power due to rising household debt and tighter loan-approval norms for home buyers by financial institutions had impacted its business.

The company, a leader in the middle- to lower-end condominium market, posted a net profit of 309.5 million baht (S$12.2 million) for the July-September quarter, versus 1.01 billion baht a year earlier, while sales tumbled nearly 60 per cent to 2.46 billion baht.

Net profit margin fell to 12.56 per cent from 16.74 per cent as no new project was completed and handed over in the third quarter and the company booked revenue from outstanding projects that were completed in the first six months, LPN said.

The company expects to book sales and backlog of 4.5 billion baht from two projects in the fourth quarter when it plans to launch three new projects, it said in a statement.

Analysts said LPN's third-quarter profit could be the lowest in 2016 but its earnings growth should remain weak on expectations of low backlog for next year.

In a separate report, LPN said it expected the sector to launch 15,000 new condominium units in the fourth quarter, down slightly from a year earlier as developers delay the launch.

In the first nine months of this year, the overall number of new condominium launches fell 5 per cent from a year earlier.

REUTERS