WHA Corporation PCL (SET: WHA) has announced its Q1/2023 performance, reporting total revenue and share of profits of THB 2,440.7 million and net profits of THB 522.7 million. Normalized total revenue and share of profits amounted to THB 2,420.1 million and normalized profits amounted to THB 505.0 million from four business hubs. The relocation of production bases by Chinese, Japanese and US investors benefited the company and significantly drove demand of Built-to-Suit and Ready-Built factories and warehouses as well as industrial estates. For power business, it improved largely due mainly to the lowering costs of natural gas and the FT rise. The Annual General Shareholders’ Meeting has recently given a green light to pay an additional dividend of 0.1003 baht/share on the 2022 performance. The dividend payment is scheduled on 25 May 2023.
WHA Corporation PCL or WHA Group reported its Q1/2023 earnings with total revenue and share of profits of THB 2,440.7 million, an increase of 11.8%, and net profits of THB 522.7 million, declining 20.3%. Normalized total revenue and share of profits amounted to THB 2,420.1 million, surging 11.8%, and normalized profits amounted to THB 505.0 million, down 22.7%. In Q1/2023, the company realized gains from the monetization of data center from the digital business at THB 345 million. If excluding gains from the data center monetization, normalized profit in Q1/2023 increased 63.6%. At the same time, WHA Venture Holding Co., Ltd, a subsidiary of the group, was approved to invest in newly issued shares of Siam Rajathanee PLC (SO), for a 20% stake worth THB 912 million. The company saw a synergy arising from its comprehensive ecosystem and SO’s leadership in outsourcing. Such the synergy will not only occur for the company’s current businesses but will also help promote future business development according to Mission to the Sun program.
Ms. Jareeporn Jarukornsakul, Chairman of the Executive Committee and Group CEO of WHA Corporation PCL or WHA Group, said that the growth of Q1/2023 performance reaffirmed the success and leadership of its four business hubs ranging from logistics, industrial estate, utilities & power and digital solutions, in both Thailand and Vietnam.
Logistics Business: In Q1/2023, WHA Group’s logistics business achieved an impressive growth thanks to the surge of demand for high-quality warehouses. This resulted in an increase of signed lease contracts for Built-to-Suit and Ready-Built factories and warehouses for 64,228 sq. m. while short-term lease contracts with high returns were signed for 88,608 sq. m. At the end of Q1/2023, total warehouse space under ownership and management stood at 2,771,151 sq. m. and the occupancy rate was 90.4%. With all these factors, the company realized revenue from the rental properties business at THB 249.6 million in Q1/2023.
After the WHA Mega Logistics Center Theparak KM. 21, which has total land area over 400 rai, was launched last year, it got positive feedbacks from many customer groups especially those third-party logistics providers (3PLs) and consumer goods operators both domestic and overseas. The strong demand from customers encourages the company to speed up the development of Phase 2, which currently has some customer groups booking space such as logistics players, automotive parts manufacturers as well as petfood and pet accessories manufacturers.
Furthermore, the WHA Mega Logistics Center Bangna-Trat KM. 23 (inbound), which has been launched recently, got strong interest from customers due to its strategic location. Currently, there are customers booking space and signing rental contracts in advance to develop a Built-to-Suit showroom.
For the Office Solutions business, the company has developed six modern office buildings for rent in prime locations with total space more than 120,000 sq. m. Besides, the company signed agreements with tenants to develop the Built-to-Suit Medical Center with space over 6,900 sq. m. Recently, WHA KW Alliance Co., Ltd (WHAKW), a subsidiary of the group, and Tokyo Tatemono Co., Ltd (TTA), formed strategic joint-venture to invest and develop the first office building in Thailand under the name of “WHAKW S25” on Sukhumvit Road. This office project is expected to be completed within Q3/2023.
Additionally, WHA Daiwa Logistics Property Co., Ltd, a joint venture between WHA Group and Daiwa House Group, has been trusted to serve as the designer and developer for Uniqlo Roadside Lat Krabang, which is considered a Built-to-Suit retail building with area of 1,019 sq. m., designed to perfectly respond to the space usage.
Given the plan to sell assets and/or leasehold rights to WHART in 2023, the company targets to divest assets representing total space of 142,000 sq. m. worth approximately THB 3,566.5 million. It will propose the asset sale plan at the meeting of WHART unitholders to seek approval in Q2/2023.
Industrial Estate Business: As of Q1/2023, total land sale was recorded at 487 rai (Thailand 379 rai/Vietnam 108 rai), and the company signed Memorandums of Understanding (MoUs) for additional 753 rai (Thailand 445 rai/Vietnam 308 rai). As a result, the company recognized total revenue from the industrial development business of THB 1,052.5 million, representing an outstanding growth when compared to last year. The company could realize revenue from the significant rise of land sale and transfer, which was in line with the overall economic outlook and investment trend in Thailand. WHA Group has benefited from the continuing relocation of production bases and investment as many investors from China, Japan, and the US have moved their productions to Thailand to mitigate the impact from the US-China trade war, the unrest between Russia and Ukraine and Chinese’s political reform that has changed the global supply chain and forced many industries to reorganize their production systems. This underscores investor confidence in Thailand’s potential as a crucial production base and investment in the region. The country is ready to support investment in new industries particularly those in targeted S-Curve sectors such as electric vehicles, smart electronics, and digital technologies. As of Q1/2023, the company had a backlog of land waiting to be transferred more than 675 rai.
“Today, WHA Group has 11 industrial estates under operations in Thailand including WHA Rayong 36 Industrial Estate (1,280 rai), which has just completed construction in 2022. There are two new industrial estates, including WHA Industrial Estate Rayong Phase 1 (1,100 rai), which is under construction, while WHA Saraburi Industrial Estate 2 (2,400 rai), which will start construction in 2026. There are also 2 expansion projects, namely WHA Eastern Seaboard Industrial Estate 3 phase 3 (630 rai) and another expansion of 460 rai at WHA Rayong 36 Industrial Estate. WHA Group’s industrial estates get customer interests from a wide range of industries, including packaging, automotive parts and industrial machinery, as well as the producer of high quality agricultural and soil loader equipment, which has already signed a land purchase and factory lease agreement.
WHA Group is actively expanding its industrial estate business in Vietnam. As of Q1/2023, the company has sold 108 rai of land and signed MoUs for an addition of 308 rai. Its growing business in Vietnam is in response to the country’s strong economic growth and potential for attracting foreign investment. At present, the company has one industrial zone opened for operations and will develop two upcoming industrial projects in major provinces with a total of 20,950 rai (3,350 hectares). For the already-opened industrial zone, WHA Industrial Zone 1- Nghe An Phase 1 with 900 rai has served a wide range of customers in sectors ranging from automotive parts, food processing, building materials and electronics, with 77% of total land in Phase 1 has been leased. WHA thereby has accelerated the construction of Phase 2 (2,215 rai) and began proposing the new zone to potential customers.
In addition, WHA Group is in the process of expanding two new industrial zone projects in the major provinces of Vietnam. The company has signed MoUs with the local authorities in Vietnam for the development of two more industrial zones. The first is WHA Smart Technology Industrial Zone – Thanh Hoa, covering 5,320 rai. Construction is scheduled to commence in 2024 or early 2025. The second is the ‘WHA Smart Eco Industrial Zone – Quang Nam,’ covering 2,500 rai. License approvals are expected in 2026 or 2027, construction activity can start immediately thereafter.
Utilities Business (Water): In Q1/2023, WHA Group recognized total revenue from utilities business totaling THB 643.3 million. The company’s total volumes of utilities sales and management both domestic and overseas in Q1/2023 reached 35 million cubic meters. Domestic water sales accounted for 28 million cubic meters, while overseas water sales amounted to 7 million cubic meters. However, domestic water sales slightly decreased compared to the same period last year due to the commercial/maintenance shutdown of some customers in the petrochemical sector, and reduced operations of power plant customers in the early part of this year. If the cost of natural gas declines in the middle of this year, it is expected that these customer groups will be able to resume operations at full capacity.
However, WHA Group still experienced positive factors due to an increase in raw water sales volume of 7 million cubic meters and value-added water products amounting to 1 million cubic meters. This increase was attributed to the commercial operations (COD) of Gulf TS 3 and TS 4 in the previous year. Furthermore, in February of this year, the company signed a contract to supply 2.9 million cubic meters per year of Premium Clarified Water to customers within WHA Industrial Estates Eastern Seaboard 4 (WHA ESIE 4).
Furthermore, WHA Group has started constructing a water production system for expanded industry use in WHA Eastern Seaboard Industrial Estates 4 (WHA ESIE 4), with a production capacity of 3.7 million cubic meters per year. This system is expected to begin commercial operation in late June of this year, in conjunction with the construction of an industrial water pipeline system to supply water to WHA Industrial Estate Rayong (WHA IER) with a production volume of 4.5 million cubic meters per year. The pipeline construction is expected to be completed in Q4/2023.
In Q1/2023, WHA Group’s water sales volume in Vietnam increased from the same period last year due to a continuous rise in water demand from customers of the Duong River Surface Water Plant (SDWTP). Additionally, the increase in water prices also contributed to this growth. Consequently, the company observed a decrease in its share of losses from the Doung River project compared to the same period last year.
Regarding WHA Group’s utilities business in Vietnam, the company anticipates further growth in total volumes of utilities sales and management due to increasing water demand from customers in the WHA Industrial Zone – Nghe An Phase 1, which has gradually operated. Additionally, the company plans to expand its utility business in tandem with the development of its industrial zones, namely WHA Industrial Zone-Nghe An Phase 2, WHA Thanh Hoa Industrial Zone, and WHA Quang Nam Industrial Zone.
For the Power Business in Q1/2023, WHA Group recognized its normalized share of profits from investments in joint ventures and associates, excluding gain/loss from exchange rate and revenue from solar business, amounted to THB 293.1 million. The significant increase was mainly from the recognition of a higher share of profits from the Small Power Producers (SPPs), which benefited from the recent increase in the Ft and lower natural gas costs. As for the Independent Power Producers (IPPs), despite the scheduled maintenance shutdown of the GHECO-One power plant in the first quarter, the share of profits of the IPPs improved compared to the same period last year.
During Q1/2023, the company’s solar business recognized revenue from solar power business amounting to THB 110.7 million and signed 10 new Private PPA projects with a total installed capacity of 16 MW, bringing the total accumulated Private PPA contracts to 149 MW in Q1/2023. The commercial operation of solar power plants was about 94 MW, resulting in a total installed capacity of 699 MW at the end of Q1/2023. It is expected that there will be an additional 20 MW of commercial solar power plants in operation in Q2/2023.
Recently, the company was selected by the Energy Regulatory Commission to develop five renewable energy power plant projects under Feed-in Tariff (FiT) Phase 1, comprising five solar power projects, having the total installed capacity of 125.4 MW equity. The projects consist of four normal solar farms and another is a solar farm with the Battery Energy Storage System (BESS). These projects are scheduled to start commercial operations (CODs) during 2029-2030.
“The company continues to expand its power business both in Thailand and Vietnam, while also seeking new markets in other countries. It aims to lead the application of new technologies and innovations in a continuous business operation to seek opportunities in the New S-Curve business. These include Battery Energy Storage Systems (BESS), Hydrogen, Carbon Trading, and Carbon Capture Utilization and Storage (CCUS), which the company currently collaborates with its partners, PTT and Sertis AI Energy Co., Ltd., under the joint venture “RENEX TECHNOLOGY” to develop and operate the Peer-to-Peer Energy Trading Platform, which will use a two-sided bidding algorithm system and Blockchain technology to enhance transaction security and provide energy-trading convenience. Presently, there are 54 leading operators in WHA Group’s industrial estates showing their interest to join the RENEX energy trading platform.”
Digital Business In Q1/2023, the company is committed to leading digital transformation to become a Technology Company, as planned for 2024. The journey will include the restructuring of its organization, new business strategies, upskilled human capital, corporate culture, and related functions to thrive in the digital era. In addition, the company will incorporate various technologies to improve its capabilities in reaching out to customers, as well as creating new value-added products to enhance customer satisfaction and customer base expansion.
In the meantime, under Mission to the Sun or MTTS, the Sustainable Development Goals or SDGs set by the United Nations have been incorporated as part of the strategy for developing projects. These include the Circular project which promotes the most beneficial use of resources in the company’s ecosystem, and WHAbit, which is a digital healthcare solution that includes data visualization features and personal recommendations. Additionally, there is the Meta W, the first industrial metaverse designed to enhance customers’ experience, create new opportunities, and strengthen its businesses in the digital era.
Recently, WHA Venture Holding Co., Ltd., a subsidiary of WHA Group, has been approved to invest in 111,597,905 ordinary shares of Siamrajathanee Public Company Limited. (SO) or 20% equity of the total number of shares after the capital increase. In this investment, the company aims to leverage the synergies from its ecosystem and the SO’s leadership in outsourcing, which is expected to create synergies for the company’s current businesses and future business development under the MTTS program. The collaboration in the first phase will cover the Center of Shared Services, expanding the outsourcing business to new industrial customers, the Workforce Excellence Academy for developing personnel and workforce readiness to support the new S-Curve industries, EV Fleet Rental and Management under the company’s Green Logistics business expansion plan, as well as ESG and Carbon Credit, which is managing the green space in industrial estates to reduce carbon emissions and increase carbon credits.
Based on the success of driving business growth in the past, it reflects the potential of strength in both management and financial structure. This has enabled the company to consistently and regularly distribute dividends to shareholders. Most recently, the company paid a total dividend of 0.1672 baht/share for the 2022 fiscal year. This includes an interim dividend already paid to shareholders of 0.0669 baht/share and an additional dividend of 0.1003 baht /share. The XD sign will be posted on 12 May 2023, with a payment date scheduled on 25 May 2023.
In addition, the company has also achieved success in offering Bond Issuance No. 1/2023 with total offerings of Baht 5,000 million to Institutional Investors and HNW. This was after it was offered for sale in March of this year. This reflects Investors’ confidence in WHA Group’s due to continuous strong business expansion plans. Regarding the use of fund, the company shall repay existing debt, and/or utilize for working capital/capital expenditure to support its business operations.
