Hemaraj Land And Development Public Company Limited announced its operating and financial results for Quarter 3, 2009 and year to date as summarized below.
Quarter 3’2009 and 9 months of 2009 Net Income
For Quarter 3’2009, Hemaraj reported Total Net Income of Baht 75.6 million, or a decrease of 81% compared with the same period last year. Earnings per-share was 0.008 Baht per share, representing a decrease of 81% from the same period of last year.
For the first 9 months of 2009, Hemaraj reported Total Net Income of Baht 422.9 million, or a decrease of Baht 842.7 million or 67% compared with the same period of 2008. The decrease of Net Income from Operating Business for Quarter 3’2009 and the first 9 months of 2009 was mainly due to lower industrial land sales and no property sales compared to the same period of the prior year. Earnings per-share was 0.045 Baht per share, representing a decrease of 67% from the same period of last year.
David Nardone, President and CEO of Hemaraj Land And Development Public Company Limited had the following comments on the company’s performance.
“Total Revenue of Baht 1,723 million for the first 9 months of 2009 represents a decrease of 59% from last year. Hemaraj Total Net Income was Baht 423 million for the same period.
All things considered, the first nine months of 2009 has shown reasonable performance in coping with the severe international and local conditions while benefiting from increasing broad recurring revenue. We continued to be profitable with a strong balance sheet for future positioning.
As noted at year-end 2008 and the first half of 2009, global economic conditions led to a dramatic collapse in durable goods consumption. Subsequent reductions in production levels to reduce inventory reflecting lower demand have now stabilized. Thailand is starting to return to more normal run rate levels of production particularly for petrochemicals with increases in purchasing and other durable goods leading indicators.
The investment in Hemaraj’s business model will remain attractive. Thailand has in the past provided an improving investment climate and predictable rules of law enforcement. However, there are current environmental concerns where investors have complied with the rules and laws in place and are seeking the government resolve for the protection of their rights and investment.
The opportunity remains for Thailand to benefit from the investment relocation and expansion of production to strategic locations based on cost currency and market access. Industrial cluster opportunities will continue for automotive, petrochemical, and other industrial sectors long term, particularly at Hemaraj’s “Detroit of the East” automotive cluster in the Eastern Seaboard and Hemaraj’s petrochemical cluster in MapTaPhut, Rayong.
Hemaraj has 77% lower revenue from industrial estate sales for the first nine months of 2009. Encouragingly we have seen a 26% growth in Utilities revenue and an 11% growth in Rental
Property revenue year to date. Our broadened recurring revenue strategy and a strong balance sheet shielded market disruption while recovering to a normal level continues.
We further continued our investment in the Gheco-One IPP power project, being on schedule.
The Hemaraj business and financial plans reflect current conditions as well as opportunities in order to optimize predictable returns to shareholders. We are cautious of economic political and market risks and appreciate the appropriate responsibility entrusted to us.”
Revenue and Results of Operations for 9 Months of 2009
For the first 9 months of 2009, Hemaraj’s Total Revenue was Baht 1,723.0 million compared with Baht 4,181.9 million for the same period of 2008, representing a 59% decrease. Total Operating Revenue from core businesses was Baht 1,738.0 million, a 56% decrease from the same period of 2008. Industrial Estate Land Sales for the first 9 months of 2009 including Profit from Associated Industrial Estate were Baht 563.6 million, or a 77% decrease. There is an additional Baht 762 million in deferred revenue from Industrial Estate Land Sales not recognized to date, based on the percent completion method from 3 industrial estate new phase developments and representing sales that will be recognized primarily over the next 3 to 18 months.
Total Utilities Revenue including industrial estate utilities, profit dividend from power utilities associates, and other utilities and services fees increased to Baht 809.4 million, an increase of 26%. Total Rental Revenue including SME factory rental, pipe-rack rental, and commercial office rental increased to Baht 391.2 million, an increase of 11%. There was no Sale of Property including SME factory sales, residential sales and other land/property for 2009 to date.
The Gross Profit was Baht 755.5 million, a 54% decrease from the same period of last year. Earning Before Interest Tax Depreciation and Amortization (EBITDA) were Baht 446.0 million, a decrease of 66%. The Gross Profit Margin and EBITDA Margin were 46% and 26%, respectively, the latter reflecting lower operating leverage.
Significant Activities for the first 9 months of 2009
- Industrial Estate Sales were net 74 rai with 13 contracts, 10 new customers and 3 project expansions from existing customers. Total industrial customers are now 404 distinct new customers with 597 contracts and 135 automotive customers.
- Hemaraj jointly invested with Glow in Houay Ho Power, (Hemaraj’s effective shareholding 12.75%, USD 7.74 million) a company operating a 152 Megawatt Hydro Power Plant in Laos selling electricity to EGAT.
Balance Sheet Highlights at 30th September 2009
At 30th September 2009 Hemaraj reported Total Assets of Baht 13,445 million, Total Liabilities of Baht 5,144 million and Total Shareholders Equity of Baht 8,301 million. The Net Debt to Equity ratio remained low at 0.54 to 1. Cash on Hand was Baht 667 million and Cash Deposit for Power Project was Baht 2,060 million.
For information concerning Hemaraj Land And Development, please visit our website at www.hemaraj.com.
Saturday, November 21, 2009
Wednesday, November 11, 2009
HK TIGHTENS REGULATIONS ON SALES OF DERIVATIVES
Officials in Hong Kong said yesterday regulations on the sale of complicated investment products have been tightened after thousands of local retail investors were burned by Lehman Brothers-backed derivatives last year.
But lawmakers said the new measures fall short and urged the government to prosecute banks that misled investors and to ban some risky products outright.
Under the new regulations, banks must issue risk warnings for complex products and record conversations between their sales staff and clients to prevent deception, KC Chan, Secretary for Financial Services and the Treasury, said at a legislative hearing yesterday. The government is also considering setting up an investor education body and a financial services ombudsman, he said.
The measures come after 30,000 Hong Kong small investors who bought US$1.8 billion (Bt60.2 billion) in Lehman-linked derivatives were left in limbo after the US investment bank collapsed September last year. They weren't fully aware of the risk their investments carried, many of the complex derivatives were innocuously labelled "mini-bonds", angry investors took to the streets.
Hong Kong regulators announced a settlement with 16 local banks in July that returned up to 70 per cent of principal to the buyers, or up to $6.3 billion Hong Kong dollars (B27.2 billion).
Opposition lawmaker Ronny Tong criticised the government for not focusing on legal action. "I think it's strange that there is not a single case of prosecution after investigating for more than a year," Tong said.
Another lawmaker, Albert Ho, asked Chan why the government didn't consider banning certain risky products altogether, as do a number of other developed markets when it comes to selling to retail investors.
"Your approach is still disclosure-based. As long as you disclose the risks, if the disclosure is fair and comprehensive, you can cell anything. But shouldn't the government exercise discretion and ban certain products that are very complicated, very risky or whose terms are unfair to investors?" Ho said.
Chan argued disclosure-based regulation is the international norm, adding that the new measures require bank staff to explan their products in layman's terms and assess their clients' appetite for risk.
But lawmakers said the new measures fall short and urged the government to prosecute banks that misled investors and to ban some risky products outright.
Under the new regulations, banks must issue risk warnings for complex products and record conversations between their sales staff and clients to prevent deception, KC Chan, Secretary for Financial Services and the Treasury, said at a legislative hearing yesterday. The government is also considering setting up an investor education body and a financial services ombudsman, he said.
The measures come after 30,000 Hong Kong small investors who bought US$1.8 billion (Bt60.2 billion) in Lehman-linked derivatives were left in limbo after the US investment bank collapsed September last year. They weren't fully aware of the risk their investments carried, many of the complex derivatives were innocuously labelled "mini-bonds", angry investors took to the streets.
Hong Kong regulators announced a settlement with 16 local banks in July that returned up to 70 per cent of principal to the buyers, or up to $6.3 billion Hong Kong dollars (B27.2 billion).
Opposition lawmaker Ronny Tong criticised the government for not focusing on legal action. "I think it's strange that there is not a single case of prosecution after investigating for more than a year," Tong said.
Another lawmaker, Albert Ho, asked Chan why the government didn't consider banning certain risky products altogether, as do a number of other developed markets when it comes to selling to retail investors.
"Your approach is still disclosure-based. As long as you disclose the risks, if the disclosure is fair and comprehensive, you can cell anything. But shouldn't the government exercise discretion and ban certain products that are very complicated, very risky or whose terms are unfair to investors?" Ho said.
Chan argued disclosure-based regulation is the international norm, adding that the new measures require bank staff to explan their products in layman's terms and assess their clients' appetite for risk.
OWNING A HOTEL OR GUEST HOUSE IN THAILAND
We've reached the end of our series on opening a hotel in Thailand. We have, however, received a number of questions from readers about this issue. Here are synopses of some of the questions that were frequently asked, and how we answered.
What licensing is required to open restaurants located in hotels?
Every restaurant must have:
- A commercial registration certificate for the sale of goods;
- a certificate or permit to keep and sell food;
- a permit to operate a business dangerous to health for activities such as baking and mixing beverages, if required by local legislation;
- permits to sell liquor and cigarettes from the nearest excise office.
We wrote a three-part series on opening a restaurant in this column late last year. This covers a lot of the basics we don't have space for here. You can take a look at it by visiting our website (address below). Also, you should know that restaurants in hotels can't be open past midnight without a permit.
ILLUSTRATION: NATTAYA SRISAWANG
If I'm an investor in a hotel, do I need a work permit to participate in the management of it?
If you are a foreigner and you are working in Thailand you will need a work permit. This includes part-time supervision of employees at a hotel, even if you are an owner of it and/or live there.
A few important issues about getting a work permit:
- To get a work permit you have to get a non-immigrant B visa from a Thai embassy outside of Thailand, even if you are already in Thailand on another visa;
- the company that owns the hotel must have paid-in capital of two million baht for each work permit it gets. Also, there should be four Thai employees for each work permit the company receives;
- to get a work permit you must bring some expertise to the table, ideally something in short supply in Thailand.
I run a development in which each house is owned by a separate person or couple, many of whom are outside of Thailand most of the time. Can I have a rental pool for these houses and run it as a hotel?
The idea of a rental pool is that some or all of the owners in a development or apartment building allow their units to be used as hotel suites while they are away. For this the owners are paid part of what the hotel guests pay, and a manager, who runs the hotel part of the operation, is paid the rest.
The rule in Thailand is that if the rental pool rents units out for 30 or more days at a time, this is fine. If you are running the rental pool as a hotel, in which guests can come and stay for as little as a single night, the rental pool will have to have a hotel licence. In this case, all of the rules about getting a hotel licence, including the environmental regulations we discussed last week, will be applicable.
If you apply for the environmental approvals after building the resort, government officers may condition approvals on changes in what has already been built. Thus you should strongly consider applying for environmental approvals before building.
Can I set up a condotel in Thailand?
A condotel is where the developer finances the construction by making each unit a condo and selling these to individual investors. The units are then run as a hotel with the profits divided between the developer, the hotel operator and the investors who own the condos.
The way the environmental licenses now work, however, is that applications for them must be different for condominiums and for hotels. Also, separate environmental licenses cannot be approved for both a condo and a hotel for the same building. Thus it's no longer possible without violating the law to develop a condominium that also has a hotel licence.
James Finch of Chavalit Finch and Partners (finch@chavalitfinchlaw.com) and Nilobon Tangprasit of
Siam City Law Offices Ltd
For more information visit
http://www.chavalitfinchlaw.com.
What licensing is required to open restaurants located in hotels?
Every restaurant must have:
- A commercial registration certificate for the sale of goods;
- a certificate or permit to keep and sell food;
- a permit to operate a business dangerous to health for activities such as baking and mixing beverages, if required by local legislation;
- permits to sell liquor and cigarettes from the nearest excise office.
We wrote a three-part series on opening a restaurant in this column late last year. This covers a lot of the basics we don't have space for here. You can take a look at it by visiting our website (address below). Also, you should know that restaurants in hotels can't be open past midnight without a permit.
ILLUSTRATION: NATTAYA SRISAWANG
If I'm an investor in a hotel, do I need a work permit to participate in the management of it?
If you are a foreigner and you are working in Thailand you will need a work permit. This includes part-time supervision of employees at a hotel, even if you are an owner of it and/or live there.
A few important issues about getting a work permit:
- To get a work permit you have to get a non-immigrant B visa from a Thai embassy outside of Thailand, even if you are already in Thailand on another visa;
- the company that owns the hotel must have paid-in capital of two million baht for each work permit it gets. Also, there should be four Thai employees for each work permit the company receives;
- to get a work permit you must bring some expertise to the table, ideally something in short supply in Thailand.
I run a development in which each house is owned by a separate person or couple, many of whom are outside of Thailand most of the time. Can I have a rental pool for these houses and run it as a hotel?
The idea of a rental pool is that some or all of the owners in a development or apartment building allow their units to be used as hotel suites while they are away. For this the owners are paid part of what the hotel guests pay, and a manager, who runs the hotel part of the operation, is paid the rest.
The rule in Thailand is that if the rental pool rents units out for 30 or more days at a time, this is fine. If you are running the rental pool as a hotel, in which guests can come and stay for as little as a single night, the rental pool will have to have a hotel licence. In this case, all of the rules about getting a hotel licence, including the environmental regulations we discussed last week, will be applicable.
If you apply for the environmental approvals after building the resort, government officers may condition approvals on changes in what has already been built. Thus you should strongly consider applying for environmental approvals before building.
Can I set up a condotel in Thailand?
A condotel is where the developer finances the construction by making each unit a condo and selling these to individual investors. The units are then run as a hotel with the profits divided between the developer, the hotel operator and the investors who own the condos.
The way the environmental licenses now work, however, is that applications for them must be different for condominiums and for hotels. Also, separate environmental licenses cannot be approved for both a condo and a hotel for the same building. Thus it's no longer possible without violating the law to develop a condominium that also has a hotel licence.
James Finch of Chavalit Finch and Partners (finch@chavalitfinchlaw.com) and Nilobon Tangprasit of
Siam City Law Offices Ltd
For more information visit
http://www.chavalitfinchlaw.com.
Clampdown on booze sales
Chechen President Ramzan Kadyrov signed a decree last week restricting alcohol sales in the predominantly Muslim Russian republic to two hours per day. "The fight against alcoholism is as pressing an issue as the fight against illegal armed groups," said Kadyrov, 32, a former rebel fighter.
The decree bans all sales of alcohol over 15 per cent proof except between 8 and 10am, Kadyrov said. Islamic leaders in the republic have been calling for a total alcohol ban.
The decree bans all sales of alcohol over 15 per cent proof except between 8 and 10am, Kadyrov said. Islamic leaders in the republic have been calling for a total alcohol ban.
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