MD & A

Analyze operations and financial status

The company’s main business is in developing and selling real estate which consists of house and allocated land suite in a condominium and hotel business. According to the operating results in 2023, the company has income from real estate sales and income from hotel operations in the amount of 794.19 million baht and 947.43 million baht, respectively, or 35.29 percent and 42.09 percent of total income, respectively. In the year 2023, the company continues to invest in developing real estate projects during ongoing construction to create sales and increase revenue recognition in the future. The company views that if the economic situation recovers and the situation of the spread of the coronavirus disease (COVID-19) has shown signs of improvement. The company will be able to sell completed real estate projects as targeted. In addition, the hotel business will begin to return to operations as intended following the recovery of the tourism industry supported by the government and the opening of the country to welcome foreign tourists. For details of assets, liabilities, and capital, as well as detailed operating results, they have been separated by type. Including important financial ratio numbers as follows.

Asset

As of 31 December 2022, the company had total assets of 12,820.07 million baht, an increase of 1,666.65 million baht or an increase of 14.94 percent from 31 December 2022, mainly due to an increase in the cost of real estate development projects for sale 1,667.6 million baht. Due to during the year, the company has main projects under development such as The Issara Sathorn Condominium Project, Sasara Hua Hin Condominium Project, both projects completed in late 2023, Baan Issara Bangna Project and new projects that are currently under development, etc. The company’s bank deposits with restrictions on use increased by 994.5 million baht from the company’s scheduled payment of 950.0 million baht of bonds on January 2, 2024, which is the first Monday after New Year’s Eve. The said amount was then deducted from the company’s account to wait for payment of the debentures. Although the company’s other non-current financial assets decreased by 167.68 million baht from the reduction in the value of investment units in the market of Investment units in Sri Panwa Hotel Real Estate Investment Trust Due to the economic situation within the country that has not yet recovered, including investor confidence in the capital market. Assets under rights of use decreased by 474.5 million baht due to amortization of assets under rights of use and reversing assets under the right of use of the SPM2 real estate lease contract that expired during the year, and land, plant, and equipment decreased by 101.7 million baht from depreciation of buildings and equipment, net of building improvements, and the purchase of additional materials and equipment during the year.

Debt

As of December 31, 2023, the company had total liabilities of 10,204.38 million baht, an increase of 2,071.55 million baht or an increase of 25.47 percent from December 31, 2022. Mainly due to an increase in bonds of 1,360.99 million baht, gym loans from institutions. Finance increased by 449.35 million baht and loans from other companies increased by 153.32 million baht from the development of real estate for sale during the year, such as The Issara Sathorn Condominium Project, Sasara Hua Hin Condominium Project, including new projects that are still in the process. In addition, trade payables and other current payables of the company increased by 951.27 million baht from overdue payments for new land projects of the company that are due for payment in April and October 2024.

Shareholder’s equity

As of December 31, 2023, the company had total shareholders’ equity of 2,615.69 million baht, a decrease of 404.90 million baht. Mainly due to the recognition of losses during 2023 and recognize the reduction in the value of the company’s non-current financial assets.

Operation Result

Income

Charn Issara Development Public Company Limited and its subsidiaries have total income from operations in 2023 in the amount of 2,250.76 million baht, an increase from 2022 in the amount of 75.25 million baht, or equivalent to an increase of 3.46 percent, which is a change in the said income. Consisting of income from 4 main businesses and other income as follows

1. Income from real estate sales in 2023 was 794.19 million baht, a decrease of 356.21 million baht from 2022, or equivalent to a decrease of 30.96 percent from the previous year. Due to the trend of higher interest rates causing a delay in deciding to purchase real estate.
2. Rental and service income in 2023 is equal to 81.07 million baht, an increase from 2022 of 16.06 million baht or equivalent to an increase of 24.70 percent due to the adjustment of electricity billing rates in 2023, an increase from Adjust the FT value that increases from electricity.
3. Income from hotel operations in 2023 is equal to 947.43 million baht, an increase from 2022 of 275.09 million baht or equivalent to an increase of 40.92 percent because at the end of 2022 continuing until 2023, Thailand has opened the country, causing foreign tourists are especially interested in traveling to the southern of Thailand.
4. Other income in 2023 is equal to 324.40 million baht, an increase from 2022 of 135.79 million baht or equivalent to an increase of 71.99 percent. Other income that increased. This is a result of profit from cancellation of lease agreement and profit from exemption from rent according to the asset lease agreement between Sri Panwa Management Company Limited (subsidiary) and Sri Panwa Hotel Real Estate Investment Trust (Trust) in 2023. The lease contract for the second investment asset has expired, allowing the company to recognize a profit from contract cancellation in the amount of 116.04 million baht. In addition, the company has also received an extension of the payment period for the lease contract of the second investment asset. The past outstanding period resulted in being able to recognize a profit from the change in the past outstanding rental period in the amount of 32.38 million baht. In addition, during the year the company had a profit from measuring the value of real estate for use. The company’s investment such as office buildings for rent and condominiums for rent amounted to 31.89 million baht. Although during the year, the Trust has considered providing assistance from the impact of the pandemic of the coronavirus disease (COVID-19), resulting in a decrease in the number of tourists for the rental of the first and third investment assets. The total amount is 42.33 million, a decrease from 2022. The trust provides assistance by waiving rent for the first and third investment assets in the amount of 94.65 million baht.

_{(Unit : Million Baht)}

Gross profit

• The company has a gross profit ratio from real estate sales in 2023 of 29.75 percent, which is a slightly decreased ratio from the previous year because overall real estate income during the past 2 years is income that has been generated. From projects that have been launched for a long time and the company will do promotions to give large price discounts and maintain gross margins.
• The company has a gross profit margin from office rental and service businesses in Charn Issara Tower 1 and 2 and condominium units in Issara Lad Phrao condominium in 2023 equal to 35.70 percent, an increase from 2022 of 1.71 percent because in 2023 the company has increased the electricity rate charged from customers from the increase in the FT fee that the Electricity Authority charges from the company.
• The company has a gross profit ratio from hotel business operations in 2023 of 22.49 percent, which is an increase from 2022 of 14.49 percent due to the situation of the spread of the coronavirus disease (COVID-19) starting to subside. Foreign tourists give preference and more interest in traveling in Thailand, resulting in 2023 hotels having better occupancy rates and resulting in improved gross profit margins from hotel business operations
• The company has a gross profit ratio from product sales in 2023 of 4.84 percent, which the profit margin decreased slightly from 2022 by 0.45 percent, mainly due to the fluctuation of oil prices.
• The Company’s gross profit margin from sales of goods in 2022 was 5.29%, with a 1.29% decrease in profit margin from 2021. Mainly due to the high volatility of oil costs due to the Russia-Ukraine war which affects the demand for oil.

The details of gross profit for each business are shown in the table below.

_{(Unit : Million Baht)}

Expenses

• Distribution and administrative expenses in 2023 are equal to 648.81 million baht, which is an increase of 3.06 percent compared to 2022. The main reason for the increase in expenses is related to sales promotion, stimulate sales during the year
• Financial expenses in 2023 are equal to 397.50 million baht, which is an increase of 27.78 percent compared to the year 2022 due to increased debt burden from financial institutions and other companies together with the increase in interest rates during the year.

Net Profit / (Loss)

The company had an operating loss in 2023 equal to 306.21 million baht, with a net loss attributable to the company’s shareholders equal to 221.60 million baht and an increased loss of 21.82 million baht compared to 2022, representing a net loss. Shareholders’ equity of the company per share is equal to 0.2078 baht.

Key Financial Ratios

1. Earnings before interest, taxes, and depreciation (EBITDA) ratio in 2023 is equal to 23.71 percent, increased compared to 2022 equal to 15.51 percent because the company has increased operating results, especially hotel operating results.
2. Ability to pay interest (EBIT / Interest Expenses) in 2023 is equal to 1.34 times, increased compared to 2022, which has the ability to pay interest approximately 1.14 times, especially from the increased operating results of the company especially hotel performance.
3. The current ratio in 2023 is equal to 1.42 times, an increase compared to the year 2022 when the company had a liquidity ratio equal to 1.12 times. This is due to the proportion of current assets in 2023 increasing by 2,463.77, accounting for 50.15 percent, mostly as a result from an increase in the cost of real estate development projects for sale. Because during the year, the company has main projects under development such as The Issara Sathorn Condominium Project, Sasara Hua Hin Condominium Project, both projects completed in late 2023, Baan Issara Bangna Project and new projects that are currently under development, etc.
4. Debt to equity ratio in 2023 is equal to 3.90 times, decreased from 2022 at the level of 2.69 because in 2023 the company issued new bonds in the amount of 950 million baht in order to repay the bonds that were due for payment of 950 million baht. On December 28, 2023 and because it is a holiday, the money will be repaid to bondholders on January 2, 2024, which will be found to cause the debt burden as of December 31, 2023 to increase significantly.
5. The book value per share in 2023 is equal to 1.50 baht per share, decreased from 2022 which has a book value per share equal to 1.82 baht per share due to not recognizing a loss for the year and recognized losses for measuring the value of non-current financial assets that decreased due to the economic slowdown affecting the capital market.