LH targets revenues to rise in double digit as property market recovers, looks to undertake CAPEX of 9 billion Baht

Land & Houses Plc (LH), Thailand’s leading property developer, has come out to say that it was expecting its revenues in 2023 to rise by as much as 16% from those seen during 2022, as demand for housing starts to improve in line with the recovering economy.

LH, which has Thailand’s 2nd largest market capitalization among property related stocks with a market capitalization of about 117 billion Baht, came out to say that it was expecting its revenues in 2023 to be more than 40 billion Baht with 35 billion Baht being derived from its core business of property development while the rest is expected to come from recurring income segment of hotels and retail space rentals.

LH also has set a budget of 9 billion Baht for its capital expenditure with 6 billion Baht going towards purchase of residential project development and 3 billion Baht for real-estate development for rental.

LH, which has always focused on development of low-rise projects such as single detached housing, will continue to remain a key player in that segment, although it says that the condominium market was starting to recover.

Naporn Sunthornchitcharoen, the chairman of the board of LH, came out to say that the target of 35 billion Baht in revenues from real-estate development, was higher than those seen in 2022 when the firm recorded 31 billion Baht. He added that the revenue from rental income would reach as high as 7.15 billion Baht, about 4 billion Baht higher than those seen during 2022.

LH, the developer of condominiums such as ‘The Bangkok’ and ‘The Key’ said that it was looking to launch 17 new projects worth 34.9 billion Baht and increase of 8% from 2022. Out of these 17 projects as many as 13 would be launched in Bangkok and its vicinity. 16 out of these 17 projects would be low rise while only 1 project will be a condominium. The only condominium would be ‘The Key Sirinakrin’ that would be worth 6.5 billion Baht that would be launched in Q3 2023.

As a result, LH would have a total of 87 projects with a total value of 91.32 billion Baht, of which 78 would be low-rise projects worth 76.45 billion Baht and 9 condominium projects worth 14.87 billion Baht, while the average selling price per unit is 8.8 million Baht, close to those seen during last year.

Analysts Remain Positive

Analysts have come out to view the recovering economy and revenues of LH in a positive light saying that although they have some of this already estimated in their outlook, LH could throw in some positive surprise in the future.

“While most of the guidance was in line with our targets, revenue guidance shows room for positive surprise. We have not added gains from asset injections to our forecast for this year but see potential for injections to proceed following no asset injections over the past two years,” Nathavut Shivaruchiwong, analyst at TISCO Securities said in a note to clients.

“We continue to rate LH as a Buy on valuations and expect strong improvement following last year’s strong low-rise sales, contribution from rental assets should grow thanks to full year performance (last year its Grand Centrepoint Space Hotel and Terminal Rama 3 weren’t launched until H2 2022) with higher share of profit,” he added putting a target price for the shares at 10.50 Baht a share.

He said that presales for 2023 are guided at 35 billion Baht, up 16% year-on-year (YoY). Rental income recognition is targeted at 7.2 billion Baht, up 52.3% YoY, while share of profit from associates should total 3.2 billion Baht, up 12% YoY.

Nathavut says that gross margin is expected to be flat YoY while planned launch value totals 35 billion Baht, up 7.7% YoY, from 17 projects. He added that the highlight was that LH plans to introduce 1 condo project worth 6.5 billion Baht, The Key Srinakarin, after no condo launches in 2022.

Naporn came out to say that the influx of international tourists has helped the company’s retnal business. Both in hotels, apartments and department stores in Thailand and the United States has benefitted. LH has invested in real estate for rent through LH Mall and Hotel Co., Ltd. (LHMH) and Land and Houses U.S.A., Inc. (LH USA).

Domestically LHMH has launched two new projects: Grande Center Point Space Pattaya and Terminal 21 Rama 3 shopping center.

Noporn said that there was no sale in the US due to the very volatile market conditions amid rising interest rates.

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