Teka Construction shifts focus to non-condo projects for revenue growth

Teka Construction Plc is shifting its attention towards non-condominium projects, housing developments, and construction materials in an effort to decrease its dependence on high-rise residential projects.

Chief Financial Officer Suphon Chongchintaraksa revealed that the company plans to broaden its scope and clientele to encompass various construction projects, including international schools, warehouses, shopping centres, and government sector developments.

“Construction work in the private sector is growing, particularly in non-condo projects,” he said. “We are bidding for the construction of international schools and warehouses with an overall value of 2-3 billion baht.”

Data from the Office of the National Economic and Social Development Council indicates that private sector construction spending increased by 1.6% to 569 billion baht in 2022, up from 560 billion baht in 2021.

The primary driving force behind this growth was the construction of other types of properties, such as factories, warehouses, hotels, and other buildings, which made up a third of the spending. This sector saw a 14.8% increase in expenditure, from 160 billion baht in 2021 to 184 billion baht in 2022.

Residential project construction constituted 53% of the spending, with a 5.6% increase to 297 billion baht in 2022, up from 282 billion baht in the previous year.

Meanwhile, commercial property construction, accounting for 16% of spending, experienced a significant 26% drop to 87.4 billion baht in 2022, down from 118 billion baht in 2021.

By diversifying its focus from condominium projects to other sectors, Teka aims to boost its revenue share from warehouses and other projects, such as international schools and government infrastructure.

By 2024-25, the firm anticipates that these sectors will contribute 10% and 5% of its revenue, respectively, up from zero this year.

Suphon expects the revenue share from condo projects and hotels and mixed-use projects to decrease to 70% and 15%, respectively, down from 74.8% and 23% this year.

By 2026-27, Teka predicts a further decline in revenue contributions from condo projects and hotels and mixed-use projects to 60% and 10%, respectively.

The revenue share from government infrastructure projects is projected to increase to 10%, while the housing development business is expected to account for 10% of the company’s revenue, reports Bangkok Post.

Teka anticipates revenue of 2.2 billion baht by the end of 2023, a 13% increase from 1.94 billion baht in 2022.

“If the minimum daily labour wage is raised to 450 baht, it will have a short-term impact on our revenue as it will affect our existing projects,” he said. “For new projects, the new wage will be factored into the cost.”