CPN on Tuesday (Sept 5) notified the SET that the company will set up a new joint-venture company called Synergistic Property Development Co Ltd to support the business expansion.
The new joint-venture has registered capital of B100,000 with ordinary share capital of 1,000 shares at a par value of B100 each.
CPN holds a 50% stake in the joint venture company, while the other 50% belongs to Ek-Chai Distribution System Co, the operator of Tesco Lotus hypermarkets in Thailand.
Nattakit Tangpoonsinthana, CPN Executive Vice-President for Marketing, said the new company will be set up to expand business in the future. Details of the business model to be developed under the new company are under study, he said.
A source in the market said Tesco had been interested in expanding into the property segment for several years.
The source noted that Tesco Lotus’s Rama 4 location is a prospective serviced-apartment development for the company.
However, Tesco did not confirm the plan and refused to give any further details on the joint venture.
A source in the retail industry said both retailers want to extend into the property sector to gain more sales and profits because the competition in the retail market is fierce.
CPN branched out into property development many years ago.
Naparat Sriwanvit, CPN Chief Financial Officer, told investors during “Opportunity Day at the SET” that the company has aggressively expanded its property business in order to increase revenue and make better use of its assets.
CPN has outlined the development of two condominium projects every year from 2018 to 2020. Each project will be a high-rise condominium with about 400 units.
The company is set to spend B11 billion to develop residential projects during 2017-20 despite fierce competition in Bangkok and sluggish housing demand upcountry.
Of the total budget, it will spend B1.7bn to develop new residential projects next year. Budgets of B2.6bn, B3.2bn and B3.5bn have been allocated for 2018, 2019 and 2020, respectively.
CPN shares closed on the SET yesterday (Sept 6) at B71.50, down 75 satang (B0.75) in trade worth B328mn.
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