Sena Development Plc is aiming to diversity its portfolio by investing in projects that generate recurring income to ensure steady cashflow, according to Asst Prof Dr Kessara Thanyalakpark, an executive director.

Although the company has already secured financial support from financial institutions, it is unlikely to place this investment in the first half of the year because it has yet to see any positive signs in the economy.

"While postponing the investment, we are doing our planning. If we think that the economy will pick up next year, we have to start the investment in the third quarter. If the economy is not good, we only waste energy in our planning," said Dr Kessara.

When Sena Development is confident in the economy, its investments will include developing a serviced apartment or a budget hotel on its plot in the Charoen Nakhon area and improving the clubhouse of the Pattaya Country Club golf course, in which the company holds a stake.

Dr Kessara had previously decided to have a serviced apartment on the Charoen Nakhon plot. But she is now considering a budget hotel as an alternative because her latest research into the Thai hotel market shows that two- and three-star hotels have always survived, regardless of fluctuations in economic sentiment.

But if Sena goes ahead with a budget hotel, it will partner with a hotel chain because it has no experiences in the field.

Investing further in the Pattaya golf course is also promising. The company has found that the number of users of its golf course has not declined, despite the bumpy economy over the past year.

Most of the Pattaya Country Club's customers are foreign retirees, so a new clubhouse could stimulate more spending from the same consumers. The investment may be in phases and the company might later add a hotel at the golf course.

A policy of diversifying income bases has led the company to expand from developing only townhouses and to move into semi-detached houses, single houses and then condominiums for low- to middle-income buyers.

It now also has an apartment with 109 rooms for monthly rent in Phahon Yothin 30, although its recurring income from this project is still not a significant portion of its total revenue.

"We cannot deny economic fluctuations so we need to find a solution to keep our cashflow steady. That's why we need to diversify our portfolio," said Dr Kessara, who also lectures at Chulalongkorn University's faculty of commerce and accountancy.

Sena Development has developed only a few projects with high margins each year for most of its 30 years of operation.

Dr Kessara said an analysis of the company's strengths and the industry showed that it is now ready to grow with larger-scale developments. Listing on the Stock Exchange of Thailand would be a tool for the company to establish sustainable growth at a rapid pace.

The company has already been approved for listing and is now waiting for the right timing. The company plans to float 280 million of its 700 million shares.

"Earlier we wanted a high price-to-earnings ratio, but if we decide that it's the time to get money for investment for future growth, we will not wait. That is because otherwise, we may lose the opportunity. Having said that, we don't want the money at the moment as there is very little investment sentiment," she said.

In Dr Kessara's view, property developers should keep their land banks until the economy picks up. As developers can fail through over-borrowing, the company will try to maintain its debt-to-equity ratio, which now stands at 0.7 to 0.8 times.

Sena projects 1.3 billion baht of sales this year, the same as last year. It is now selling the second phase of The Niche Lat Phrao 48 condominium project and its The Cache low-end condominiums in Lam Luk Ka Klong 2 and Poochao-Rama III.

The low-end market is a very sensitive segment, especially regarding loan applications, so the company has focused on working with customers to help them establish enough credit to get their loans approved.

source : www.bangkokpost.com