Thailand’s biggest beermaker plans to spend about 100 billion baht ($2.96 billion) on hotels, shopping centres and property projects over five years as higher taxes and curbs on alcohol marketing erode earnings for the industry.
Singha Estate, a unit of closely held Boon Rawd Brewery, will invest 60 per cent of the budget in commercial property and the remainder to develop residential real estate, CEO Naris Cheyklin said in an interview. The expansion will boost revenue to at least 20 billion baht by 2019 from 362 million baht last year, he said.
The Bhirombhakdi family, who’ve produced Singha beer at Boon Rawd since 1933, is following the lead of billionaire Charoen Sirivadhanabhakdi, who expanded his property business amid government measures to curb alcohol consumption in Buddhist Thailand.
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Charoen was forced to list his Thai Beverage unit in Singapore in 2006 after activists and monks held protests to block a local share sale by the maker of Mekhong whiskey.
“Boon Rawd has a very strong financial position from its beer and beverage businesses, and this should give them a lot of financing for expansion,” Chanpen Sirithanarattanakul, head of research at DBS Vickers Securities (Thailand) in Bangkok, said. "In the long term, demand for residential homes, hotel rooms and exhibition space will continue to grow with the population and the economy.”
Singha Estate’s purchase of hotels and a residential property developer in 2014 may help the company become profitable this year, Naris said in an interview at his office in Bangkok on Monday.
"The company will be very aggressive on acquisitions because this will offer the fastest revenue growth,” he said.
The Bhirombhakdi family took over Rasa Property Development in September and renamed it Singha Estate. The company reported a net loss of 250 million baht in 2014, compared with a 26.1 million baht profit the year before.
Singha Estate has surged 140 per cent through yesterday since the takeover was announced April 16 last year.
News by Bloomberg, edited by ESM