SIRI: Profit Surges but Cashflow Sinks

As the Covid-19 pandemic bottomed out, Sansiri Public Company Limited (SIRI) in the third quarter has launched a talk-of-the-town promotion “24-month instalment waiver campaign” to stimulate sales, which driving up unit transfers for the 10-month period to as high as 36,000 million baht. Therefore, SIRI revised up its unit transfer target from 42,000 million baht to 43,000 million baht.  

 

In 3Q20, SIRI reported net profit of 765 million baht, a significant increase of 70% from net profit of 451 million baht a year ago. 

 

The revenue for property sales increased 87% to 7,635 million baht consisting of 3,580 million baht from single-detached houses, 742 million baht from townhouses / home Offices, 169 million baht from mixes and 3,143 from condominiums. Meanwhile, the revenue from projects for rent amounted to 28 million baht, increasing from 23 million baht.

 

The overall business seems very sound, however, when taking a look at SIRI’s cashflow…that’s worrisome… the cash balance as of September 30, 2020 slightly increased to 2,425 million baht from a cash balance of 2,132 million baht in the end of 2019, showing an unbalance between sales volume and cashflow.

 

It was expected to be an outcome of the “24-month instalment waiver campaign”, in which the consequences can be double-edged sword. 

 

Hence SIRI fell into a profit surge but cash shrink situation.

 

At the meantime, total liabilities of SIRI as of the end of 2020 amounted to 73,143 million baht, despite decreasing from 76,461 million baht a year ago, but it still remains high.

 

If SIRI doesn’t solve this problem, SIRI will get stuck endlessly in the cashflow trap.