The listed developer M.K. Real Estate Development Plc plans to launch three new projects and expand new phases worth a combined three billion baht but will wait to review market feedback to the government's property stimulus measures by midyear before expanding further.

"If there is a repeat of the situation in the fourth quarter of last year, the property market will get worse," president Chuan Tangmatitham said yesterday.

MK posted 300 million baht in sales in the fourth quarter of 2008, its poorest quarter of the year.

Mr Chuan said negative factors continued to affect the industry. They include the economic slowdown, lower confidence, limited investment, rising unemployment, reduced purchasing power, tighter lending rules and reduced income from tourism and exports.

However, he said there were also positive factors including an improved political situation, low interest rates, a downward trend in inflation, decreasing prices of oil and steel and, most helpfully, the tax breaks from the government for new home buyers.

MK plans to invest 500 million baht for new land acquisition this year. It would also add the 0.5% it would gain from the tax incentives to its marketing budget of 3% of total sales. The higher marketing budget would not affect its gross margin which remains at 39% of total sales.

The company set a target to achieve 2.5 billion baht in sales this year, up by 10% from last year, with 1.1 billion contributed by its backlog from 2008. Currently, the company has 17 existing projects with total remaining sales value exceeding five billion baht.

Due to more cautious cashflow management, the company's debt-to-equity ratio has fallen to 0.52 times as of the end of the third quarter of 2008 while interest-bearing debt totalled 900 million baht at the end of 2008. To date its cashflow stands at 100 million baht.

The president of the 50-year-old developer said the company would continue using pre-approvals to check customers' credit history, which had helped reduce the loan rejection rate to 9.1% last year from 16.2% in 2006 and 11.2% in 2007.

MK shares closed yesterday on the SET at 1.16 baht, unchanged.

source : www.bangkokpost.com