CPAXT has established a subsidiary with a registered capital 8.39 billion baht to acquire Happitat at the Forestias Co., Ltd., a mixed-use real estate development business, to carry on the development of shopping malls and utility hub at The Forestias, a luxury property project owned by the Chearavanont family.
The Forestias is an ambitious, mixed-use development project by Magnolia Quality Development Corporation (MQDC) located in Bangkok, Thailand. It is designed to integrate urban living with nature, focusing on sustainability and a healthy environment. The project was first announced by MQDC in 2017.
CP Axtra Public Company Limited (SET: CPAXT) will hold 95% shareholding in Axtra Growth Plus and MQDC will hold the remaining 5%. The Happitat comprises the three shopping mall buildings (one of the shopping malls has a 10-story office tower located above) and a Central Utility Plant building serving as a central utility hub. The entire project is located within The Forestias.
CPAXT announced that the acquisition was completed on 13 December 2024 by means of using cash and/or loans from the banks and financial institutions as the source of funds.
At first glance it could be seen as a positive sentiment to CPAXT shareholders as the company is expanding its business into a property development, especially with this significant kickoff at The Forestias.
However, several raised their concerns on some key points, especially on the ESG concerns, which is seen as a quick bailout for MQDC. This could lead to questions on the governance issues for CPAXT.
More importantly, CPAXT is not known for its expertise on property development. It could be difficult for the company amid the high competition landscape in the Bangna area that houses Mega Bangna and the soon-to-open Bangkok Mall.
Additionally, there are concerns regarding the acquisition price as the project is around 80% completed which should have given CPAXT some bargaining power. Now the 8.4 billion baht could become a financial strain for the company.
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.
