LPN and the New Recurring Income to Regain Investors’ Confidence!

As real estate business is entering a business slow down era, L.P.N. Development Public Company Limited (LPN) has to adjust with the new trend and find new business for recurring income.

 

Up until now, LPN had conquered the lower and medium markets, focused on real estate vertical integration or condominium. However, the future of its business does not seem to be so bright anymore as LPN gathered a total of five projects of unsold condominium units to join the  Government Housing Bank’s “One Million House Project”

These five projects are 1) Lumpini Township Rangsit-Klong 1, 2) Lumpini Ville Pranangklao-Riverview, 3) Lumpini Ville Ratchaphruek-Bangwaek, 4) Lumpini Ville Ratburana-Riverview, and 5) Lumpini Town Chonburi-Sukhumvit.

 

It is a perfect selling chance for LPN, but in the meantime, it reflects a problem in the lower and medium markets that LPN used to thrive in. Which is the reason why LPN joined One Million House Project, a clearance sale.

This has shown that relying only on condominium business may be a bit too risky for LPN, pressuring a need for recurring income.

 

Recently, LPN joined Nye Estate (NYE) to establish a joint venture company, Dolsiri Development Company Limited, developing office building and rental space near Rama 4 Road. The investment in this joint venture was around THB 1,500 million.

This could be another “Money Channel” for LPN.

 

Upon checking LPN’s previous four yearly financial statements, the company faced a decline both in revenue and profit just like any other real estate developer.

In 2015, LPN booked THB 2,413.40 million of profit from the revenue of THB 16,673.64 million (14.47% net profit margin). In 2016, the profit decreased to THB 2,176.23 million from the revenue of THB 14,650.64 million (14.85% net profit margin) while in 2017, the profit suddenly dropped to THB 1,062.32 million from the revenue of THB 9,655.14 million (11% net profit margin).

As for the profit in 2018, LPN was able to raise its profit to THB 1,367.27 million from the revenue of THB 11,301.89 million (12.10% net profit margin).

 

When a sign of danger appears, LPN must find a recurring income to save itself, in which the company had found NYE to be a business partner. From now on, there should be more new projects in creating recurring income from LPN.

The decline in share price that fell constantly to ฿6-7/share could be from the concern of business slow down in the real estate sector that caused investors to sell LPN’s shares.

 

The initiation of LPN on creating recurring income could be a good sign to regain confidence from investors more or less.