‘Singha Estate’ unveils its business plan in the second half of 2020 to cope with the COVID-19 crisis and maintains the steady financial positioning, which will drive the company forward with the five-year investment plan and 68-billion- baht budget. The company will concentrate on developing a new business model under the “New Living & Working Cluster” concept in potential locations to serve changing consumer demand and investment in the New Normal era, and developing Smart M&A to build portfolio for sustainable growth in harmony with local communities well-being and environmental conservation.
Mr. Naris Cheyklin, Chief Executive Officer of Singha Estate Public Company Limited or “S” reveals about the company’s business direction in the second half of 2020 that although the overall property market faces challenges from the COVID-19 crisis, Singha Estate will continue to invest 68 billion baht under its five-year business plan (2020-2024) and follow sustainable growth strategy. To adapt with the current situation, the company has revised down its 2020 revenue target by 50% and expects its business will recover in the fourth quarter of this year.
“The company hopes the COVID-19 crisis will eventually end soon. We see many business opportunities and potential investments arising along with the economic improvement. We will consider investment suitability under the strict M&A criteria to have quality asset that will create added value in the future,” he said.
“Therefore, we will keep building our three core business units as long term planned. For the residential and commercial businesses, we will penetrate new locations and develop quality projects under the “New Living & Working Cluster” Business model concept to respond to the New Normal trend, while the hospitality business will generate additional incomes and grows business sustainably with Smart M&A and Asset Light Model. With these business practices, we aim to recover and will also support our business partners to overcome the crisis together. Our business philosophy is to enrich life value for all stakeholders and build sustainable growth along with quality society and environmental conservation,”.
During the COVID-19 crisis, the company has undergone its efficient financial management, maintaining a low net interest bearing debt to equity ratio at 0.86 times. This came from the listing of S Hotels & Resorts Plc on the Stock Exchange of Thailand late last year, and the sale of Suntowers’ 30-year lease rights into S Prime Growth Leasehold Real Estate Investment Trust (SPRIME REIT), making the company ready to invest and expand business as expected. Furthermore, the company has plans to strengthen its financial positioning in the future by transferring rights of Metropolis Building and Sun Plaza into REIT and issuing bonds when the market is favorable.
Grow sustainably and follow five-year business plan
Singha Estate will build its sustainable growth, carrying on its five-year business plan with the 68-billion-baht budget. For the residential business, the company currently has an inventory of units valued about 1-2 billion baht, hence it can implement a sale policy that can maintain a good profit margin for its projects. In the second half of this year, the 6.5-billion-baht ESSE Sukhumvit 36 whose sales is 60%, will be completed and start the ownership transfer to customers in the third quarter. About 3-4 new residential projects will be launched with expansion more on low rise residential segment. For the next four years, the company will keep the target to launch 5-7 new projects per year as planned.
For the commercial business, Singha Estate still set its target to grow its total office space to 300,000 square meters over the next five years. During the COVID-19 outbreak, this business unit has slight impact as most tenants are leading companies. To adapt to new normal trends, the company will upgrade hygiene standards and facilities by installing Touchless Solution and UV in the air-conditioning system to serve its tenants. It will reach out new potential tenants such as those in the high growth sectors of E-commerce, technology, and consumer products.
For the hospitality business, the company through SHR will promote its hotels in domestic and inter-region tourist markets during the second half of this year to next year. SHR has plans to acquire hotels in Asia Pacific and expand the hotel portfolio to 80 hotels over the next five years from 39 hotels currently.
Mr. Naris noted that apart from the planned investment, Singha Estate will expand the development of residential projects and office buildings into new potential locations with the “New Living and Working Clusters” business model to accommodate the change of customer behavior in the future.
The company sees opportunities to develop residential projects in new potential areas along the expansion of mass transit systems and road networks. The low-rise projects with mix-used concept including single house, townhouse, retail, and low-rise office as well as wellness residential project will be new opportunities that can come up soon.
Meanwhile, the company believes there is future office demand in various format and it is ready to serve tenants with “Work Space Solution” – flexible space solutions in different locations including large building, medium-sized building, or low-rise building as well as co-working space in new locations. The workspace solutions will be equipped with IT system. The company plans to launch this new concept of workspace at Sun Towers late this year to facilitate tenants who want to have office space that can provide the highest efficiency.
SHR to build quality hotel portfolio with Smart M&A and Asset Light Model strategy
SHR plans to grow its hospitality business in a long term and foresees that the tourism industry will recover progressively from quarter this year in Thailand and countries with good healthcare system and controllable infection rate. Even though the hospitality industry has been hardly affected during the COVID-19 pandemic, its business opportunities still arise. The company will move on with Smart M&A strategies by acquiring hotels that are in popular tourist destinations, enhance asset potential and recycle capital through the sale of hotel properties to REITs or buyers who offer good value. In addition, it will also pursue the Asset Light Model by generating additional income through home grown brands, including a new brand expected to be launch soon. The program will commence late this year or in 2021. Currently, SHR has already launched SAii, its first home-grown hotel brand, with a flagship opening in CROSSROADS Maldives.
“SHR targets to double our hotel portfolio from 39 properties around the world to 80 within the next five years. We focus on providing unique experiential offerings to our guests and creating sustainable growth. Our new home-grown hotel brand will be launched soon to generate additional incomes under the Asset Light Model and increase the portfolio without heavy investment,” Mr. Dirk De Cuyper, Chief Executive Officer of S Hotels & Resorts Plc, addressed.
Reaffirm Global Holding Company, diversify to new business, and enrich life value
In addition, Singha Estate reaffirms its strategy as Global Holding Company as planned in 2020. It also sees investment opportunities in new business that is a renewable energy with the 5-megawatt project in Maldives. This is considered the starting point of the company in environmental conservation.
For the branding strategy, the company aims “Singha Estate” to be most trusted brand, aside from the development of highest quality project, it has adopted expertise in sustainability, which began building since the company’s establishment and is now widely accepted especially in the environmental conversation and promotion of quality of life. This will create business competitive advantages for Singha Estate and upgrade services of the entire business to meet global hygiene and safety standards.
“Singha Estate business philosophy is to take care all stakeholders, support business partners, and create quality society. During crisis, we cooperate with the government and join hands with other companies to fight the COVI-19 pandemic. Importantly, we also support local communities where we operate our business and to help them survive through the COVID-19 crisis with strength and stability,” Mr. Naris concluded.