The move by CPAXT to invest 8.4 billion baht in Happitat at the Forestias Co., Ltd., a mixed-use real estate development business, could be the first step for the company to venture into a property development business.
However, the move has also been seen as a bailout for Magnolia Quality Development Corporation (MQDC), an international property development owned by the Chearavanont family. The company is currently developing a mega project named The Forestias, a luxury mixed-use development project.
The amount of maturing debentures issued by MQDC continues to raise concerns in the market despite the company making a statement earlier this year to counter talks in the market about liquidity crunch, stating that the company will meet obligations with its debentureholders with redemption of around 9.7 billion baht at that time.
MQDC currently has 45,161 million baht of long-term debenture with maturity date ranging from 2025-28, according to ThaiBMA website, of which seven debentures at a total amount of 22,500 million baht are due in 2025.
This year, MQDC issued eight series of debentures to raise 12,100 million baht.
As for the investment by CPAXT, Bualuang Securities (BLS) gave a negative outlook, expecting that there should be traffic from The Forestias, but high competition in the area also posed a challenge for the company.
Initially, the firm expected the project to have a negative impact on CPAXT’s earnings per share (EPS), approximately -2% to -4%, translating to a target price impact of about THB1.00 per share.
Given the project’s different nature compared to CPAXT’s existing operations, the company needs to explain to investors how it plans to manage the project with the same efficiency it strives for in businesses like Makro and Lotus’s.
