WHA Group Announces H1/2022 Result, Normalized Net Profit THB 992.0 Million, Rising 112.8%; Expects Additional Land Sale 600 -700 Rai; Moving to Net Zero by 2050
Bangkok - WHA Corporation Public Company Limited (WHA Group) announced its performance for the first six months of 2022, with total revenue and share of profit of THB 4,369.0 million and net profit of THB 945.7 million. Normalized total revenue and share of profit amounted to THB 4,403.4 million and normalized net profit to THB 992.0 million. Foreseeing the brighter outlook of the second half, WHA Group expects to close a land sale deal with major customers for additional 600-700 rai in Q3/2022 together with deals under discussion for total 2,000-3,000 rai. Its logistics business remains strong with almost 100,000 square meters of new projects/contracts added in portfolio. Recently, Chairman and Group CEO, Ms Jareeporn Jarukornsakul has announced another key milestone for WHA Group to achieve Net Zero to reduce greenhouse gas emissions by 2050 and to create sustainable growth by driving the group’s businesses in line with SBTi guidelines.
WHA Corporation Public Company Limited (WHA Group), reported its Q2/2022 performance, with total revenue and share of profit and net profit of THB 2,186.8 million and THB 289.6 million, respectively. The company recorded normalized total revenue and share of profit of THB 2,238.9 million and normalized net profit of THB 338.8 million, an increase 18.3% and 20.0% from the same quarter of last year.
For the first 6 months of 2022, the company recorded a total revenue and share of profit of THB 4,369.0 million and net profit of THB 945.7 million. The company also reported normalized total revenue and share of profit of THB 4,403.4 million, and normalized net profit of THB 992.0 million, an increase 31.6% and 112.8% from the same period of last year. This has reflected on the strength and solid fundamental of WHA group’s 4 business hubs.
Ms. Jareeporn Jarukornsakul, Chairman of the Board of Directors and Group Chief Executive Officer of WHA Corporation Public Company Limited, revealed that the performance of WHA Group during the first half of 2022 has increased firmly, in line with the country’s economic recovery. Following the relieving of Covid-19 situation across the region, investments resumed both locally and internationally and had a positive impact on WHA Group’s businesses, as reflected on the performance of its four business hubs.
Logistics Business: Outstanding growth was achieved. During the first half of 2022, the company signed additional Built-to-Suit projects and ready-built factories/warehouses, totaling 111,136 square meters. For Q2/2022, the company signed new Built-to-Suit projects/ contracts for a total of 87,946 square meters with several major players in both e-commerce and logistics businesses.
The company also signed short-term high-yield contracts totaling 96,071 square meters, representing 96% of 2022 short-term leases target, aiming at 100,000 square meters. In H1/2022, the company had assets under owned and managed of 2,683,502 square meters. Due to constant demands for high-quality warehouse space, the company’s occupancy rate in the second quarter and the first half of 2022 reached 90%. The company has recognized revenue from rental properties business during Q2/2022 and the first six months of 2022 in total THB 284.3 million and THB 512.8 million, respectively.
As its logistics business continuously demonstrated outstanding performance through high demand, during the second half of 2022, the company expected to sign more short and long-term contracts with both existing and new customer as well as commit to deliver the leased space to its customers. Despite the rising costs of construction materials, the company has already implemented effective cost management by entering the purchase contracts with key contractors in order to fix material prices in advance, allowing the company to avoid an increase in construction costs and company expenses.
Industrial Estate Business: With Thailand’s re-opening and the easing of travel restriction policy, foreign customers are now able to travel freely for business, site visits, and purchase land in the company's industrial estates. Currently, the major group of potential investors are from China and the US, including those who are operating in various industries such as next generation automotive, consumer products, and data centers. These factors have reflected in the company’s performance in H1/2022, as the company achieved total land sales of 513 rai (482 rai in Thailand and 31 rai in Vietnam) and outstanding Memorandums of Understanding (MOU) of 230 rai (48 rai in Thailand and 182 rai in Vietnam). In Q2 and H1/2022, the company was able to recognize revenue from industrial development business for a total of THB 704.0 million and THB 1,398.0 million, respectively. These higher land sales are in line with the overall economic recovery and investment situation in Thailand.
At present, the company is expanding both domestically and internationally. WHA Rayong 36 Industrial Estate in the Eastern Economic Corridor Special Development Zone (EEC), on an area of 1,281 rai is now ready for interested customers. Moreover, the company is expanding WHA Eastern Seaboard Industrial Estate 4 Phase 2, by offering another 580 rai, as well as an additional 1,100 rai for WHA Industrial Estate Rayong Phase 1. This will increase land available for sale to support the future incoming demands for industrial land. Furthermore, recent government measures to promote investments in electric and zero-emission vehicles, such as subsidy and tax incentives, will be key investment uplift and provide an incentive for production relocation in related sector. This will be another positive impact on the company’s industrial estate business, as more than 30% of its customers are in the automotive industry
The outlook for industrial estate business in H2/2022 is expected to be better than in H1/2022, with projected sales volume higher than last year. The rising tension between the US, China and Taiwan has become a driver behind manufacturing relocation to Southeast Asia. The company has been receiving many requests from interested investors for a site visit. In Q3/2022, the company expects to sign land purchase agreements around 600-700 rai with major customers. This also raises number of outstanding backlogs to more than 1,000 rai which the company expects to handover and recognize some of the revenue during the remaining of 2022. The company is also in active discussion with several potential customers for a combined demand of over 2,000-3,000 rai.
In Vietnam, the company recorded total land sales of 31 rai and secured outstanding MOUs of 182 rai in H1/2022. This is in line with the macroeconomic conditions and improved investment situation following Vietnam’s border re-opening. Vietnam as one of the fasted growing economies has recently experienced high GDP growth rate and steady flow of foreign direct investments (FDI) which help drive the company’s industrial land sales in Vietnam. With WHA Industrial Zone Nghe An receiving very good response from investors and enquiries keep coming continuously, the company has accelerated the development plan for Phase 2, covering over 2,200 rai. Construction has already started early this year and upon the completion, WHA Industrial Zone Nghe An will cover a total area of over 11,550 rai.
In the future, the company anticipates that Vietnam’s economic and social growth will lead to more demand for land in high-quality industrial zones. As a result, the company also expand and accelerated the development of new industrial zone projects in Thanh Hoa province.
Utilities Business (Water): Steady growth was recorded. The company was able to recognize revenue from its utilities business in Q2 and H1/2022 totaling THB 663.2 million and THB 1,285.2 million respectively, an increase of 11.3% and 8.7% compared to the same period of last year. The company’s total volume of water sales and under management for Q2 and H1/2022 reached 39.4 million and 75.1 million cubic meter while domestic water sales for Q2 and H1/2022 totaled 32.4 million and 62.3 million cubic meters respectively. These remarkable results across all product categories were due to the rising water demand from the petrochemical sector and power plant customers, especially Gulf SRC who started its commercial operations of the new block.
In Vietnam, the Duong River Surface Water Plant (SDWTP) recorded total water sales in Q2 and H1/2022, based on equity shareholding, have reached 6.7 million and 12.2 million cubic meters respectively. This was due to rising water demand from both existing and new customers, as well as the easing of the COVID-19 situation in Hanoi.
Sales of value-added products in Q2 and H1/2022 reached a total of 1.3 and 2.5 million cubic meters respectively. Determined to develop and launch new projects to serve customers’ needs, the company has signed a purchase agreement with Gulf SRC who plan to commercialize its 3rd and 4th production units in Q3/2022. This will lead to higher water demand 1.4. million cubic meters per year. Apart from the company’s attempt to expanding its customer base for conventional water products, both raw and general industrial water, it is also focuses on value-added products such as demineralized water and premium clarified water which can be obtained from wastewater recycling processes to promote environmental protection and sustainable development.
For development plans outside WHA industrial estates, the company signed an agreement last year with Asia Industrial Estate to establish a new joint-venture company to produce and distribute value-added water for industrial customers within Asia Industrial Estate. The first phase, now under construction, has production capacity of 1 million cubic meters per year. The plant’s commercial operations are expected to commence in Q4/2022.
Aside from investments to increase water sales volume, the company has invested in other alternative raw water resources such as reservoirs in order to relieve the company, making it less dependent on major water distributors, and reduce long-term costs by relying on its own production capacity of alternative water resources. The company expects, through this initiative, it shall be able to add an additional raw water reserve by 11 million cubic meters per year.
In Vietnam, the company carried on its utilities infrastructure development project within WHA Industrial Zone Nghe An Phase 2, which it already started construction process in Q1/2022 following the completion of Phase 1 in order to serve increasing demands from both existing and new industrial customers. Meanwhile, SDWTP and Cua Lo projects are investing in water pipelines and distribution system to cover and service larger area.
Power Business: the company recognized normalized share of profits from investments in joint ventures and associates, excluding gain/loss from exchange rate, and revenue from solar business in Q2/2022 and H1/2022 at THB 290.7 million and THB 383.4 million, respectively. In Q2/2022, normalized share of profit from the power business declined compared to the same period of 2021 but improved significantly from Q1/2022. This was due to an increase in normalized share of profit from GHECO-One power plant as during Q2/2022, it was less affected by maintenance while normalized net profit from SPP power plants rose due to the adjustment of Ft since May, which partially offset the negative impact from rising costs of natural gas. Although the impact from increasing cost of natural gas due to global situation is expected to prolong until the second half of the year, with additional Ft adjustment approved by the Energy Regulatory Commission (ERC), the downside impact to SPP revenue from industrial users contribution will substantially reduce similar to previous cycle.
Regarding to the performance of solar business in Q2/2022, the company signed 13 solar rooftop contracts, with 10 Private PPAs contracts for combined capacity of 21 MW, and 3 contracts for EPC service, with an accumulated capacity of 3 MW. As a result, at the end of Q2/2022, the company had accumulated Private PPA contracts for a total of 125 MW. During the period, the company have successfully commercialized and sold solar electricity to customers for an additional 2 MW, driving the total COD capacity of solar power projects to 62 MW. At the end of H1/2022, the company had total COD capacity based on equity shareholding at 612 MW. Recently, the company has entered into an agreement with Ford Motor Company for Thailand’s largest solar carpark project. The project, situated on a rooftop area of 59,000 square meters, will generate solar capacity of 7.7 MW and with total investment of THB 235 million. The project’s installation work has already kicked off, and due to be completed in 2023.
The company aims to drive its solar business to the next level by adopting digital technologies. A smart project has been co-developed with business partners including PTT and Sertis, such as “RENEX” Peer-to-Peer Energy Trading Platform. Blockchain technology has enhanced transaction security and transparency and allow the prosumers, WHA Group’s industrial customers to buy and sell solar power freely. Moreover, “RENEX” has been submitted and included as a pilot project in Energy Regulatory Commission (ERC) Sandbox, whose project status is now in the preparation stage for commercial trading testing in Q3/2022. Once commercialized, this electricity trading platform will be a jigsaw that drives the company’s renewable energy portfolio and future growth. Currently, more than 23 operators have participated as clean energy traders in this pilot project.
Digital Platform Business: WHA Group continues to support investors aspring to use 5G technology to enhance long-term competitiveness. The company plan to roll-out the fiber optic cable network (FTTx) in all eleven WHA Group’s industrial estates within this year. Facing challenges from technology and for the group to expand to new customer base, the company commit to constantly introduce new products and services, such as the WHAbit application, a collaboration with Samitivej Virtual Hospital to offer Telemedicine, Health Check-ups and Smart Clinic services for staff and customers in WHA industrial estates, logistic centers and office buildings.
Moreover, the company recently sponsored World RoboCup 2022, which took place last July to promote the use of state-of-the-art Robotics, AI and Automation technology among the new generation. This sponsorship reinforced WHA Group’s commitment to promote research in deep technology, including skills development of IT personnel to create innovative solutions to enhance productivity and safety in all sectors.
Ms. Jareeporn Jarukornsakul revealed WHA Group’s plans to continuously invest in and collaborate with start-ups. Currently, WHA Venture Holding Co., Ltd. (WHAVH) invested in Mercular Co., Ltd, a vertical E-commerce start-up specializing in hobby lifestyle products, such as audio gadgets, gaming gears, hobby stations and other recreational equipment. This investment will allow Mercular to integrate its E-Commerce value chain with WHA Group’s well-established logistics ecosystem, including premium warehouses and distribution centers while Mercular.com will serve as another channel for WHA Group to expand their customer base to young generations and to play a greater role in the B2C business. The synergies also exist with leading E-Logistics start-up Giztix, in which WHA Group invested last year with respect to efficient transportation services especially the last-mile delivery.
The company are committing to offer products and services that meet customer needs and changing consumer behaviors under dynamic competitive environments. It has launched WHA Office Solutions, the office buildings for rent, located in various areas of Bangkok and Samut Prakan to serve the needs of corporate customers looking for flexible working spaces. Its portfolio includes grade-A office building such as WHA Tower, a 25-storey office building with 52,000 sq.m. of leased space in Bang Na-Trad area. Currently, WHA Tower has achieved approximately 50% occupancy rate with many potential customers to sign additional lease agreements. Another prime project is WHA KW, a low-rise office building with 9,900 sq.m. of space, located at the corner of Sukhumvit Soi 25 (Sukhumvit-Asoke), accessible to major mass transit routes. Currently, WHAKW is under construction and expected to be completed within Q2/2023.
Regarding its plan to sell assets and/or leasehold rights in 2022, unitholders of WHA Premium Growth Freehold and Leasehold Real Estate Investment Trust (WHART) and WHA Industrial Leasehold Real Estate Investment Trust (WHAIR) has already approved the proposed transaction. The company aims to sell assets with a combined rental space of 208,149 sq.m., worth THB 5,397 million. It expects to realize revenue from assets sales within Q4/2022 as planned. WHART has been nominated in 2022 ESG100 list by Thaipat Institute for four consecutive years, emphasizing its outstanding ESG performance and Thailand’s largest industrial REIT in terms of asset value as of 31 March 2022.
Lastly, the Group CEO concluded that the company committed on sustainable development by emphasis on environmental protection, social promotion, and good governance. It also determined to reduce global warming, lower greenhouse gas emissions, and invest in infrastructure such as renewable energy and relevant technologies in line with education, innovation, and technology. This will drive sustainable growth across the company’s value chain to achieve net zero greenhouse gas emissions by 2050, in accordance with the SBTi guidelines to mitigate climate changes.