Which real estate company performed the best in 2017 according to TerraBKK Research? Following the financial results of public companies from the latest disclosure by the Stock Exchange for the year 2017, Land and Houses (LH) stood out with the highest figures in four categories: total revenue of 41.9 billion baht, net profit of 10.4 billion baht, net profit margin of 24.96%, and EBIT Margin of 32.64%. Meanwhile, the return ratios such as ROE and ROA belonged to Origin Property (ORI) with figures of 55.25% and 17.88%, respectively. TerraBKK Research summarized the data on sales, net profit, ROE, ROA, EBIT Margin, and NET Profit Margin as follows (excluding Pruksa Holding PSH since the company primarily operates as a holding company).

Sales and Net Profit
          Land and Houses (LH) excelled with the highest performance, achieving a revenue of 41.9 billion baht and a net profit of 10.4 billion baht, far ahead of the second place, Sansiri (SIRI), which had a revenue of 31.8 billion baht and a net profit of 2.82 billion baht, and the third place, Supalai (SPALI), with a revenue of 25.7 billion baht and a net profit of 5.81 billion baht. However, observing the trends from 2014 to 2017, there are seven companies showing a continuous upward trend: Supalai (SPALI), Property Perfect (PF), Ananda Development (ANAN), Origin Property (ORI), Singha Estate (S), Pruksa (PRIN), and Eastern Star Real Estate (ESTAR). On the other hand, two companies have shown a continuous downward trend: Quality Houses (QH) and Raimon Land (RML), while the remaining companies have fluctuated based on the respective years.


Return on Equity (ROE)
          Origin Property (ORI) excelled with the highest ROE for three consecutive years: 55.25% (2017), 32.35% (2016), and 37.97% (2015). The average ROE for the real estate sector ranges from 3.5% to 15%, reflecting the ability to manage operations to provide returns to shareholders. Meanwhile, the companies with a consistent upward trend include Noble Development (NOBLE), which has doubled its growth every year. Additionally, Land and Houses (LH), Lalin Property (LALIN), Pruksa (PRIN), and Eastern Star Real Estate (ESTAR) also show an upward trend. Conversely, on the downward trend side, there are seven companies: L.P.N. Development (LPN), SC Asset (SC), Sansiri (SIRI), Raimon Land (RML), Sammakorn (SAMCO), Principal Capital (PRINC), and Nusasiri (NUSA).


Return on Assets (ROA)
           Origin Property (ORI) excelled with the highest ROA for three consecutive years, reflecting the company's efficiency in utilizing assets for profitable investments: 17.88% (2017), 16.00% (2016), and 19.10% (2015). The average ROA for the real estate sector typically ranges from 3.5% to 9% over the past 2-3 years. The companies showing a consistent growth trend include Noble Development (NOBLE), Lalin Property (LALIN), Eastern Star Real Estate (ESTAR), Pruksa (PRIN), and Singha Estate (S). Additionally, the two companies with the most significant downward trends recently are Raimon Land (RML) at 3.3% (2017) down from 11.9% (2016) and 12.3% (2015), and L.P.N. Development (LPN) at 6.88% (2017) down from 14.37% (2016) and 15.89% (2015).

EBIT Margin and NET Profit Margin
            Land and Houses (LH) excelled with a net profit margin (NPM) of 24.96% and EBIT Margin of 32.64%, the highest in the sector for three consecutive years. However, in terms of revenue growth, it does not belong to the group of companies showing a continuous upward trend, which includes seven companies: Supalai (SPALI), Noble Development (NOBLE), Origin Property (ORI), Lalin Property (LALIN), Quality Houses (QH), Eastern Star Real Estate (ESTAR), AP (Thailand) (AP), Land and Houses (LH), Pruksa (PRIN), and Singha Estate (S). Meanwhile, the group showing a downward trend includes four companies: Munkong Housing (MK), Raimon Land (RML), Property Perfect (PF), and N.C. Housing (NCH).


              Finally, the financial results of the real estate sector do not show significant concerns regarding debt, as most have a debt-to-equity (D/E) ratio not exceeding 2 times. However, it is noted that four companies have a D/E ratio exceeding 3 times: Major Development (MJD) at 4.19 times, Charn Issara Development (CI) at 3.67 times, Origin Property (ORI) at 3.22 times, and Ariya Property (A) at 3.04 times, reflecting poor capital structure management and high financial risk. ---TerraBKK

Article by: TerraBKK Investment Tips
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