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https://www.nationthailand.com/business/30404054

Singha Estate secures exclusive rights for 30 per cent shareholding in three major co-generation power plants

CorporateMar 24. 2021

By The Nation

Almost 70 per cent of power output pre-sold

“We have secured these rights under very attractive terms.  They are an important part of the jigsaw that will make Singha Estate into one of Thailand’s foremost property, power generation, and engineering services companies, while tripling the size of our business in three years.” 

“We want a business that can become huge, combining steady, consistent returns with exciting growth opportunities.  We will leverage the synergies between our four business platforms to give us great competitive strength.” 

— Chutinant Bhirombhakdi, Chairman, Singha Estate PCL

Singha Estate PCL (S), a leading Thai property investment and development company, today, announced that it has secured the exclusive rights to acquire a 30% shareholding in three major co-generation power plants with total capacity of 400 megawatts, at par value, and with a total investment of Bht 1,392 million.

The first of the plants is an operational 123 megawatt (MW) combined cycle co-generation power plant that is owned and operated by Angthong Power Company Limited and located in the ‘World Food Valley’ industrial estate in Ang Thong, Central Thailand.

The second and third plants, each with 140 MW capacity, are greenfield operations that are currently under construction and will enter into service in 2023.  They are also located in the ‘World Food Valley’ industrial estate.  The licences for these power plants are owned by B.Grimm Power (Ratchaburi) 1 Limited and B.Grimm Power (Ratchaburi) 2 Limited.

The three acquisitions are subject to Singha Estate’s shareholders’ approval at its Annual General Meeting on April 23, 2021.

Chutinant Bhirombhakdi, Chairman of the Board of Directors of Singha Estate PCL, said, “We have secured these rights under very attractive terms.  They are an important part of the jigsaw that will make Singha Estate into one of Thailand’s foremost property, power generation, and engineering services companies, while tripling the size of our business to Bt20 billion in revenues in three years.” 

Singha Estate recently announced that 2021 is a transition year for the company in which it is moving into the next phase of its development by embracing businesses that complement its three core property businesses that are comprised of commercial property, residential property, and resorts and hotels.

“We want a business that can become huge, combining steady, consistent returns with exciting growth opportunities.  We will leverage the synergies between our four business platforms to give us great competitive strength,” Bhirombhakdi said.

Thitima Rungkwansiriroj, Chief Executive Officer, Singha Estate PCL, said, “Licences for power generation plants of this size are a very rare commodity, so we are especially pleased to have secured rights to a substantial stake in three important power plants.  They will give us an immediate and sure-footed presence in this sector.”

“Our options are made particularly attractive by the fact that 270 MW, or close to 70 per cent of the combined output of the three power plants, is already pre-sold at guaranteed prices.  This assures us sustainable recurring revenues that will enhance the resilience of our business,” she added.

According to Rungkwansiriroj, Angthong Power is the only power plant in Thailand that is profitable even without the need to sell to independent users and that 75 per cent of its output is taken up through a 25-year power purchase agreement with the Electricity Generating Authority of Thailand.  She noted that “the use of advanced technology has reduced costs and further improved the margins of the business beyond initial estimates.”

The three power plants are expected to generate Bt7,500 million in revenues in 2024.

“Apart from the synergy benefits that we foresee from these acquisitions, their returns as stand-alone businesses are also attractive.  We have a draw-down facility with banks so that Singha Estate only needs to put up minimal capital, and at the tail end under a ‘back-end equity’ arrangement,” Rungkwansiriroj said.

Singha Estate has a low net debt-to-equity ratio of 0.96 and access to Bt25 billion in credit facilities.

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https://www.nationthailand.com/business/30404041

Cabinet okays Bt350bn aid measure for tourism industry, small businesses hit by Covid

CorporateMar 23. 2021Arkhom Termpittayapaisith, Minister of Finance (left) and Supattanapong Punmeechaow, Minister of Energy (right)

By The Nation

The Cabinet approved two aid measures proposed by the Finance Ministry on Tuesday, Deputy PM Supattanapong Punmeechaow said.

Under the scheme, Bt250 billion under a revive and restart credit measure for hotel operators and tourism businesses and about Bt100 billion for an “asset warehousing” project to help small businesses.

Under the warehousing project, small business owners can “park” their assets and buy them back over five years. The businesses will be allowed to continue using the property.

The Thai Bankers Association has said it is ready to support both measures to help businesses affected by the Covid-19 fallout to survive as well as help revive the national economy.

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https://www.nationthailand.com/business/30404004

Billionaire’s workaday clothing firm becomes a sportswear sensation

CorporateMar 23. 2021A WORKMAN Plus store in Tokyo. MUST CREDIT: Bloomberg photo by Toru Hanai

By Syndication Washington Post, Bloomberg · Min Jeong Lee, Yoojung Lee

When it comes to Japanese retail billionaires, the first name that springs to mind might be Tadashi Yanai, the entrepreneur behind the Uniqlo brand and the nation’s richest man.

But there’s another founder who’s drawing attention as one of his biggest companies transforms in the country.

Yoshio Tsuchiya’s Workman Co. has expanded beyond its roots as a maker of drab uniforms for laborers into low-cost, functional sportswear and outdoor gear. The evolution has won praise from investors, analysts and even Fast Retailing Co.’s Yanai, who says the company has created a “new market.” Other observers question whether the positive momentum has reached its limit.

Workman’s shares have more than quadrupled since the start of 2018, despite paring some of their gains recently. That boosted Tsuchiya and his family’s stake in the company alone to about $4.5 billion, according to the Bloomberg Billionaires Index. For one analyst, the retailer has the potential to really take off when the country gets clear of the covid-19 pandemic.

“It’s one of the more exciting stories in Japanese retail” once things get back to normal, said Ruhell Amin, global head of retail equity research at William O’Neil & Co. in London.

Tsuchiya opened Workman’s first store in 1979 when he was in his late 40s. The company specialized in work clothing for construction laborers, a booming business in the country’s bubble economy of the 1980s.

In 2016, Workman moved into low-cost outdoor gear before opening its first WORKMAN Plus store two years later to focus on sports and outdoor clothing. The company had 632 regular stores and 269 WORKMAN Plus shops across Japan as of March 10, often in areas where blue-collar workers live.

One popular product is a waterproof jacket that costs $36 (3,900 yen), much lower than comparable offerings by other companies. A “climb light jacket” from The North Face, for example, retails for about $300 (33,000 yen).

“Because our clothes were originally designed to suit workers, they weren’t inferior to sportswear in functionality, and most importantly, they could be made at cheap prices,” Tetsuo Tsuchiya, a family member and senior managing director at Workman, said in an interview with ITmedia Business Online in January. “We realized that was Workman’s strength.”

Richard Kaye, a portfolio manager at Comgest Asset Management Japan Ltd., which owns Workman shares, said the quality of the company’s products can be better than more expensive brands because of its established supply chain.

The apparel maker boasts “high performance at one-half to one-third the cost of famous brands,” Ryozo Minagawa, a senior analyst at SMBC Nikko Securities Inc. in Tokyo, wrote in a November note. It has “no competition” in the cheap sportswear segment, he wrote.

“I want them to keep it up — competition is a source of development,” Fast Retailing’s Yanai told reporters following an earnings release in October when asked about the threat of Workman. “We created a new market and so has Workman,” he said. “The clothes have functionality and I think they’re very good.”

But others, such as Citigroup Inc., say that while Workman has performed strongly in casual wear, growth in the category may be hitting a wall.

“It seems that the boost generated by the expansion of the existing format to include casual wear is reaching its limit,” Citigroup analyst Yingqiu Zhang wrote in a note this month after the company’s same-store sales for February fell 3.7% year on year, the first such decline since September 2017.

A a WORKMAN Plus store in Tokyo. MUST CREDIT: Bloomberg photo by Toru Hanai

Workman declined to make any of the company’s executives available for an interview. Beisia Group, which is behind the family’s various businesses, declined to make Yoshio Tsuchiya available for an interview. The 88-year-old entrepreneur, who rarely speaks to media, established a supermarket operator in the late 1950s and built it into a retail empire with Workman as the flagship listed entity.

The conglomerate counts home-center chain Cainz Co., shopping-center operator Beisia Co. and Workman as the largest of its 28 companies, according to a Toyo Keizai report in December. They’re followed by convenience-store operator Save On Corp., consumer-electronics retailer Beisia Denki Co. and car-goods shop Auto R’s Co.

Those six chains account for 90% of the group’s revenue, according to the Toyo Keizai report. In an interview for the article, Tsuchiya said the group’s sales topped 1 trillion yen for the first time in the 12 months ended October.

Tsuchiya and his family may be worth more than $8 billion when its holdings in the other group companies, which are privately held, are also included. That makes them among the richest people in Japan, according to the Bloomberg Billionaires Index. But the family’s gains have grown harder to come by in recent months, with Workman shares losing more than a fifth of their value from a recent high in July.

William O’Neil has removed Workman’s stock from its firm’s “focus” basket in the recent sell-off, but Amin says that’s just because it’s going through a “technical breakdown.”

The company, meanwhile, is set for a new challenge. It plans to open a new category of stores called WORKMAN Girl, which offer casual and outdoor gear for women. It has only one such store and aims to launch 399 more in 10 years.

Over the longer term, Workman’s prospects remain good, according to Amin.

“It’s a great company, well-managed with a clear, unique focus,” he said. “Sales growth has been phenomenal on a month-on-month basis over the past three to four years,” he said. “Clearly they’ve been doing something well.”