Mankhong Housing Co., Ltd. (Public) or MK, a real estate development company under the "Chuan Chuen" brand, is expanding into the rental and service market, aiming to grow its recurring income business to achieve a profit ratio of 50:50 as per its 5-year business plan. The company has reported progress on its rental factory and warehouse business at the Bangkok Free Trade Zone, located in Bangna-Trad Km. 23, managed by Prospek Development Co., Ltd., a subsidiary that has generated accumulated revenue of 730 million baht from 2016 to 2018. It is expected that this year, it will generate an additional 340 million baht, with plans to fully lease 350 rai by 2020, which will lead to a revenue growth of 70%, amounting to 580 million baht in 2021. The company is also looking to expand into adjacent areas to accommodate the increasing demand for rental space.

Ms. Ratchanee Mahatdechakul, Managing Director of Prospek Development Co., Ltd., stated that the rental factory and warehouse business at the Bangkok Free Trade Zone has been a significant and continuous revenue generator for MK. Over the past three years, it has generated up to 730 million baht. In 2019, there are plans to develop an additional 200,000 square meters and to have a total rental area of 285,000 square meters by 2021, with projected revenue growth of 70%, or 580 million baht. The main tenants are expected to be foreign clients, with 27% from Japan, 24% from Europe, and 21% from Thailand, followed by 19% from other Asian clients (excluding Thailand and Japan) and 9% from Oceania and America.

“Our operations over the past three years have been focused on marketing, and we are starting to see results this year. Most clients come through our website, agents, and from meeting them at trade shows, which has made our project well-known. Based on our operational estimates, we have found that the occupancy rate here is not less than 90%, which gives us confidence that the project will receive a positive response from both Thai and foreign clients,” she added.

The Bangkok Free Trade Zone is located at Bangna-Trad Km. 23 and is a designated area for factories and warehouses that has been approved as a Free Zone, accommodating the needs of clients renting space. Clients can choose between the Free Zone or General Zone. Within the Bangkok Free Trade Zone, we have two types of rental buildings: 1) warehouse buildings and 2) factory buildings. Since the project is located in a purple zone, operators can build factories in this area without worrying about permits. The total area of the project is 1,000 rai, with 700 rai designated for leasing, or Leasable Area, while the remaining 300 rai is for public utilities such as public roads, wastewater treatment plants, and security within the project.

The highlight of the Bangkok Free Trade Zone project is that it includes both Free Zone and General Zone areas, providing services in both warehouse and factory rental spaces, with a comprehensive security system on a large area of over 1,000 rai, located in the largest purple zone in the area. It has two access routes: Bangna-Trad Road Km. 23 and Bangna-Trad Road Km. 19, with convenient transportation, being only 23 kilometers from Klongtoey Port, 17 kilometers from Suvarnabhumi Airport, and 90 kilometers from Laem Chabang Port. Additionally, it is only 50 kilometers from the Eastern Economic Corridor (EEC) development area, with additional services prepared for both Thai and foreign operators, such as consulting services for business permits in Thailand, business preparation steps, documentation, and advice on obtaining licenses for operating in the bonded warehouse area (GSC 185), among others. The project also has complete internal utilities, including wastewater treatment systems, flood prevention systems, security, and cleanliness management within the project, as well as zones for shops, restaurants, and customs services for tenants.

“In terms of risk and competition, we see that the Bangkok Free Trade Zone project has low risk due to its complete features and good location, so we are not worried about the clients renting space. However, in terms of business growth, we still need to find land to continuously develop warehouse and factory rental projects to expand our business growth and create recurring income for the parent company. Therefore, we are still looking for opportunities and suitable land to continue expanding this business,” Ms. Ratchanee Mahatdechakul concluded.

For the first half of the year, Mankhong Housing Co., Ltd. reported revenues of 2,970 million baht, an increase of 323 million baht, with a net profit of 258.7 million baht, representing a 51.5% increase. The rental and service business has shown strong growth with a continuous growth rate, resulting in a significant increase in gross profit margin. The gross profit margin from the rental and service business in the second quarter rose to 30.3%, and it is expected that the gross profit margin from the sales side and the rental and service side will be in a 50:50 ratio as per the 5-year business plan.

Thank you for the information from www.mk.co.th