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CP Land Looks West

The start date for the Asean Economic Community (AEC) is now just six months away and the Southeast Asian marketplace continues to be a source of investment and speculation both from within the countries of the region and from outside investors.

In a recent announcement from the conglomerate CP Group, its property arm, CP Land  announced its first steps towards expanding into the regional and overseas market.

CP Land said it plans to spend around 500 million baht in taking over an office building in Myanmar’s main city and port, Yangon. The company is also planning on outlaying one billion baht to take on a hotel in central Europe, with Croatia being tipped as the location.

While the European deal is yet to be confirmed, the Yangon deal has been completed and CP Land will be signing a Memorandum of Understanding (MOU) to purchase the hotel from the local owners very soon.

The Thai company recognizes that demand for office space in Yangon is rising with so many foreign companies keen to invest in Myanmar. The monthly rate for office rent is around 2,400 baht per square metre at present, which is twice the figure a tenant would pay for a premium office rental in Bangkok.

CP Land said it expects the purchase of the eight-storey building with its 6,000 square metres of lettable space to have returned its outlay in five years.

Part of the reason why CP Land is looking to take funds out of Thailand and into the broader world marketplace is their belief that the property business in the country is still sluggish overall and has not gained any real traction in the first six months of this year. [1]

As a spokesman for CP Land noted, financial institutions have been cutting back on their lending due to Thailand’s weak economy, although the government has promised to ramp up its spending in the second half of this year in the hope of ensuring at least a three percent growth in GDP. 

Telco and brewer launch joint venture into vending machines

While CP Land may not be sanguine about the property market in Thailand at present, other areas of the local business landscape are still seen as attractive to investors looking at the longer term.

The telecom and technology-related company Forth Corporation has joined forces with Boon Rawd Brewery in a joint venture agreement to invest almost 200 million baht in the beverage-vending machine business. The machines will also be designed to permit users to top up phone credits and pay some bills.

Although the final shareholding structure and general business plan are yet to be finalized, an initial agreement is due to be signed between Forth Corporation and Boon Rawd Brewery on 27 July.

Both companies acknowledge they may need to invest substantial sums over the coming years, the initial investment amount will be 200 million baht.

boonterm e1435903125649 1 - CP Land Looks West
Visual of Forth’s vending machine, Boonterm, from www.technologyhut.co.th

Forth Corporation said it will install the vending machines throughout Thailand with the day-to-day management of these devices left to its own subsidiary Forth Smart, which currently runs a machine called Boonterm which permits users to top-up their mobile phones.

The tie-up with Boon Rawd Brewery is a win for the beverage distiller as it will increase that company’s distribution channels. [2]

Plan B moves into the grade A advertising sector

Master Standard Display Co Ltd, a subsidiary of Plan B Media, is another company showing faith in the long-term resilience of the Thailand marketplace, recently spent 12 million baht to acquire 100 percent of total issue shares in the Triple Play Co Ltd, thereby giving it access to the lucrative airport advertising sector.

The acquisition is part of Plan B Media’s business expansion into new areas in an effort to cover all bases for its customers.

Triple Play, with a registered capital of 31 million baht, operates the advertising signboard media business under license from Airports of Thailand (AoT). The company is responsible for LED signboards and CCTV at the baggage section of the Suvarnabhumi International Airport.

Plan B Media informed the Stock Exchange of Thailand (SET) that the source of its funds for the purchase of Triple Play came from its internal cash flow. [3]

Property Developer looks to expand further

The SET was also informed of a move by the listed property developer Prinsiri to acquire a majority stake in a company called KPN Holding.

Prinsiri’s board of directors has approved the acquisition and plans to achieve this by way of a cash payment of 4.032 billion baht as well as share swaps.

The board has called for an extraordinary shareholders meeting scheduled for 28 August to outline its case.

Prior to the acquisition- assuming the shareholders meeting rubber stamps the boards’ plan- KPN Holding will buy up the entire stake in its own subsidiary, KPN Group Corporation, which is the division running the group’s property business.

After that, Prinsiri will acquire eight million ordinary shares in KPN Holding, at 504 baht per share.

Prinsiri has said the transaction will be divided into two parts. Prinsiri will issue 960 million ordinary shares at a par value of one baht each and offer 2.1 baht for a share swap. This will total 2.016 billion baht, while the remaining half will be paid for in cash.

prinsiri02 e1436120814759 - CP Land Looks West
Visual from Prinsiri website

Prinsiri’s acquisition will include the transfer of all assets and debts as well as rights and obligations from KPN Holding. The end result will see KPN Holding taking a 30.57 percent stake in Prinsiri, with both major companies no doubt looking to streamline their operations into the future on the back of such a large merger.

Despite the overall negative feelings towards the property market, Prinsiri directors said the company had recorded sales of 601 million baht in the first quarter of this year, with a net profit of 820,000 baht. The company expects revenue to reach 2.6 billion baht this year. [4]

[1] Bangkok Post, 27 June 2015

[2] http://www.dealstreetasia.com/tag/forth-corporation/ accessed 6/7/15

[3] ibid.

[4] http://www.dealstreetasia.com/stories/thai-property-developer-prinsiri-swaps-share-with-kpn-8745/ accessed 7/6/15

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