WHA Reports Strong 2Q23 Performance with Net Profit Increase 199% YoY, Positive Momentum Expected to Continue

WHA Corporation PCL (SET: WHA) has announced its Q2/2023 performance, reporting total revenue and share of profits of THB 3,248.1 million and net profits of THB 866.1 million. The normalized total revenue and share of profits amounted to THB 3,150.5 million and normalized profits amounted to THB 817.3 million. These impressive results are attributed to the robust growth of the company’s four business hubs. Half-year land sales doubled from the same period last year. The company also aims to expand its land sales target to facilitate the relocation of manufacturers from China, Taiwan, Japan, and the United States. The company has lately secured land lease contracts for over 300 rai in Vietnam with global leading electronic producers.

WHA Corporation PCL or WHA Group has reported its Q2/2023 earnings with total revenue and share of profits amounted to THB 3,248.1 million, an increase of 48.5% year-on-year, and net profits of THB 866.1 million, an increase of 199.0%. Normalized total revenue and share of profits amounted to THB 3,150.5 million, increasing 40.7%, and normalized profits stood at THB 817.3 million, an increase of 141.4% year-on-year.

During the first half of 2023, the company reported a total revenue and share of profit of THB 5,688.9 million and a net profit of THB 1,388.8 million. When considering the performance of the normal business operations, the company achieved a normalized total revenue and share of profits of THB 5,570.6 million, an increase of 26.5%, along with a normalized profit of THB 1,322.3 million, an increase of 33.3% compared to the same period last year. This growth reflects the potential for continuous expansion across all four business hubs, particularly the logistics business which saw more signed lease contracts of Built-to-Suit and Ready-Built Factories/Warehouses. Industrial land sales have also increased due to the relocation of production bases, with Thailand and Vietnam being selected as the preferred locations due to the readiness for investments in new and emerging industries.

Miss Jareeporn Jarukornsakul, Chairman of the Executive Committee and Group CEO of WHA Corporation PCL (WHA Group) revealed that the growth of the company’s performance in 1H/2023 reinforces its leadership across the four business hubs. Particularly, the industrial estate business has continued to benefit from the trends of relocating production bases and manufacturing facilities. This ongoing development has led the company to be contacted by foreign investors for site visits to invest in the establishment of industrial factories. With the significant rise in industrial land demand, the company has focused on advancing the development of its industrial estate projects to meet the rising needs of customers in both Thailand and Vietnam.

Logistics Business: In the first half of 2023, the company’s logistics business witnessed significant developments as it saw more signed leased contracts for Built-to-Suit and Ready-Built Factories/Warehouses for an additional 74,929 sq.m., while short-term lease contracts with high returns totaling 120,904 sq.m, exceeding the initial target of 100,000 sq.m.  As a result of the consistent demand for high-quality warehouse spaces, the total warehouse space under ownership and management stood at 2,784,234 sq.m., achieving an impressive overall occupancy rate of around 90.5% by the end of 1H/2023. Consequently, in Q2/2023 and 1H/2023, the company was able to recognize income from the rental properties business amounting to THB 262.8 million and THB 512.4 million, respectively. At the same time, the logistics business has the potential to sustain its growth in the latter half of 2023 with the opportunities to secure new lease agreements, both short-term and long-term, with new customers including the successful delivery of rental spaces as planned.

In addition, the company unveiled the WHA Mega Logistics Center Theparak KM. 21 last year, which spans over 400 rai of land. Due to the positive feedback and steady demand for high-quality warehouse and distribution centers during the Phase 1 project from customers such as logistics service providers, consumer goods distributors, and producers/distributors of pet supplies and pet food, the company is now accelerating the development of Phase 2. Currently, it is gaining interest and is in negotiations with several potential customers. Recently, Webasto, one of the world’s 100 automotive component suppliers, has already signed a Built-to-Suit lease agreement for a warehouse space of 13,083 sq.m. in the Phase 2 area. This confirms the increasing demand for premium warehouse spaces and distribution centers. Meanwhile, the company intends to expand the Built-to-Suit factory facilities for existing client who produce battery for electric vehicles at WHA Chonburi Industrial Estate 1 to accommodate electric vehicle market, reflecting the future trend of electric cars.

For the Office Solutions business, the company currently has 5 modern office buildings available for rent, with total space of more than 120,000 sq.m. There is also a construction project, Quant Sukhumvit 25, located in the Sukhumvit-Asoke area, which is expected to be completed in Q3/2023. This 7-story office building will feature commercial space covering 9,900 sq.m. Besides, there is a retail project for commercial use, covering space over 3,000 sq.m. This project is situated near the Surasak Skytrain station and is expected to be completed in early 2024. Moreover, there’s the also Built-to-Suit Medical Center project, with space over 6,900 sq.m, which has already signed contracts with tenants and commenced construction in May this year.

Recently, the company has joined forces with IWG PLC to introduce an all-inclusive workspace called “Regus at WHA Tower” covering an area of over 826 sq.m, the building features rental office space, co-working areas with full-fledged services, and virtual offices with business addresses. The “Regus at WHA Tower” has been officially opened since July and has already achieved a 22% occupancy rate.

“The company constantly keeps updating about the latest technologies and innovations such as Artificial Intelligence (AI), Internet of Things, and Quantum technology to apply to the logistics business.  At the same time, there is a strong commitment to sustainable business practices, evident through initiatives like the Green Logistics and Green Building projects, which is a part of the company’s environmental conservation policy. Recently, the company signed a Memorandum of Understandings with Marubeni (Thailand) Co., Ltd to jointly conduct a study on providing efficient and integrated electric car services, using EV Fleet Management Service. This concept integrates digital technology, expertise, and skilled drivers to cater to the needs of both logistics customers and WHA Industrial Estates. The partnership is aligned with the company’s Green Logistics project development plan.”

Regarding the plan to sell assets and/or leasehold rights to WHART this year, recently WHART trust unit holders have already approved further investment in additional assets. The company has set a target to sell rental warehouse space assets, totaling 142,583 sq.m, worth a total of THB 3,567 million. The revenue is expected to be recognized in Q4/2023 as planned.

Industrial Development Business: In the first half of 2023, the company reported a total land sale of 1,049 rai (941 rai in Thailand and 108 rai in Vietnam), grew 104.5% from the same period last year. Also, the company signed Memorandums of Understanding (MoUs) for additional 1,310 rai (994 rai in Thailand and 316 rai in Vietnam). Consequently, during Q2/2023 and 1H/2023, the company recorded total revenue from its industrial development business amounting to THB 1,470.3 million and THB 2,522.8 million, respectively. The remarkable improvement in land sales aligns with the overall economy and Thailand’s investment direction. This trend has been influenced by the ongoing relocation of investment capital, driven by concerns arising from the US-China trade war and global geopolitical tensions that have impacted the global supply chain. This has prompted various industries to overhaul their production systems. Notably, major players from China, Japan, and the United States have chosen to increase their investments in Thailand. Not only the surge in investment relocation, but the expansion of production bases also played a pivotal role in attracting long-term investments from around the world. As a result, at the end of Q2/2023, the company held a backlog of pending rights transfers to customers, spanning over 799 rai (779 rai in Thailand and 20 rai in Vietnam).

Meanwhile, land sales in Thailand in Q2/2023 accounted for 562 rai, higher than total land sales both in Thailand and Vietnam in Q1/2023 which stood at 487 rai. For this quarter, the major customers came mainly from China, together with other main customers from Taiwan, and Japan respectively. Furthermore, total domestic land sales in the first half of 2023 doubled from total land sales in the same period last year.

“At present, the company operates 12 industrial estates in Thailand, including a new industrial estate – WHA Industrial Estate Rayong Phase 1 (1,100 rai) which is under construction. Several customers have expressed interest, and some of them have already signed land purchase contracts in the Phase 1 area. With the positive response to Phase 1, the company is speeding up the development of Phase 2 (additional 1,100 rai) shortly. There is also WHA Industrial Estate Saraburi 2 (2,400 rai), which is expected to start construction in 2026. The company is also expanding two new industrial estates including WHA Eastern Seaboard Industrial Estate 3 Phase 3 (630 rai) and WHA Rayong 36 Industrial Estate (460 rai)”

For the industrial estate business in Vietnam in 1H/2023, the company recorded a total land sale of 108 rai and an MoU totaling 316 rai. This growth is derived from the investment situation in Vietnam, which is benefiting from the production base relocation and the country’s strong economy, and the potential to attract foreign investors. At present, the company has already established WHA Industrial Zone 1 -Nghe An, which has started construction of Phase 1 covering 900 rai. More than 77% of Phase 1 areas have already been sold to industrial customers in sectors ranking from automotive parts, food processing, building materials, and electronics. Due to the rising demand for industrial land, the company is currently accelerating the construction of Phase 2, covering an area of 2,215 rai. Even though the project is still under construction, the company has already started to propose this project to potential customers, with some portions of the land having already been sold. Recently, in Q3/2023, the company signed a contract with a global leading electronics equipment manufacturer to develop several types of electronic components on more than 300 rai of land within WHA Industrial Zone 1 – Nghe An Phase 2. The investment by the major electronic components manufacturer reaffirms the company’s strengths and advantages of Nghe An province including strategic location, skilled workforce, basic infrastructure, utilities, and eco-friendly solutions.

Furthermore, the company has signed a Memorandum of Understanding with the local administration in Vietnam to develop two additional industrial estate projects, covering 20,950 rai (3,350 hectares) in total. The first project is the WHA Smart Technology Industrial Zone – Thanh Hoa, which encompasses 5,320 rai and is scheduled to start construction in 2024 or early 2025. The second project is the WHA Smart Eco Industrial Zone – Quang Nam, covering 2,500 rai, which is expected to receive license in 2026 or 2027, construction activity can start immediately thereafter.

However, in the latter half of the year, the industrial estate sector has the potential to grow better than the first half due to the increasing trend of relocation investment and production base in the Southeast Asian region. Additionally, the average land price sale has been continually rising. At present, our company is in negotiations with several investors, and we have also been contacted for site visits by foreign investors who are interested in investing in industrial plants, especially those involved in electric vehicle manufacturing, electronic equipment production, and consumer products distributors.  Therefore, the company needs to accelerate the development of its industrial estates in order to meet the growing demand of its customers in both Thailand and Vietnam. It is expected that by the end of 2023, the company will have signed land sale and purchase contracts exceeding the target set earlier this year, totaling 1,750 rai (1,200 rai in Thailand and 550 rai in Vietnam). Besides, the company aims to expand its land sales target.

Utilities Business (Water) The performance of the utilities business continued to grow steadily, with the total volume of utility sales and management, both domestic and overseas, in Q2/2023 and 1H/2023 reaching 40.5 million cubic meters and 75.3 million cubic meters, respectively. This was due to increased sales of raw water and value-added water products, which were driven by rising demand from customers in the energy sector. In addition, water sales volume overseas increased due to water sales from the Duong River project, which experienced growth from customer base expansion in Vietnam, resulting in constantly growing pipe water sales in Vietnam. These factors contributed to the total revenue generated from utilities business in Q2/2023 and 1H/2023, which amounted to THB 786.5 million and THB 1,429.8 million, respectively. In Q2/2023 and 1H/2023, domestic water sales amounted to 31.9 million cubic meters and 60.1 million cubic meters, respectively.

Although, in Q2/2023, there was a decline in the utility sales volume due to the commercial shutdown of some petrochemical customers and a decline in wastewater management. However, if compared to the same period last year, in Q2/2023, the company still has positive factors from an increase in the volume of raw water products by 9.0 million cubic meters and an increase in the volume of value-added water products by 1.4 million cubic meters. This is due to the rising water demand from energy sector customers as well as the increase in revenue from excessive water usage fees, amounting to THB 108.0 million, from customers with high water usage needs. In June this year, the company also started selling Reclamation water to customers in the WHA Eastern Seaboard Industrial Estate 4 (WHA ESIE 4) with a contracted volume of 2.9 million cubic meters per year.

For utilities business in Vietnam during Q2/2023 and 1H/2023, the total water sales volume according to shareholding equity stood at 8.6 million cubic meters, and 15.3 million cubic meters, respectively. This expansion is in response to the increasing water demand from customers of the Duong River Surface Water Plant (SDWTP) project, which has been continuously growing. Additionally, factors supporting this expansion include the adjustment of water prices, leading the company to acknowledge a decreased share of losses from the Duong River project when compared to the same period last year.

In addition, it is anticipated that the water sales volume and wastewater management will continue to witness a growing trend, in line with the demands of customers progressively commencing operations within the WHA Industrial Zone 1 – Nghe An Phase 1, while aligning with the company’s utilities business expansion plans and industrial estate development projects including WHA Industrial Zone 1- Nghe An Phase 2, WHA Smart Technology Industrial Zone-Thanh Hoa and WHA Smart ECO Industrial Zone- Quang Nam.

For the Power Business, WHA Group recognized its normalized share of profits from investments in joint ventures and associates, excluding gain/loss from exchange rate and revenue from solar business, amounted to THB 388.8 million in Q2/2023 and THB 681.8 million in the first six months of the year. For the Q2/2023 performance, the significant increase of normalized share of profits came mainly from the recognition of a higher share of profits from the Small Power Producers (SPPs), which benefited from the recent increase in the Ft compared to the same period last year, better reflecting the cost of natural gas.

For the solar business in Q2/2023, the company signed new Private PPA projects with a total of installed capacity of 18 MW, bringing the total accumulated Private PPA contracts to 167 MW at the end of Q2/2023. In this quarter, the commercial operations of solar power plants were approximately 104 MW, resulting in a total of installed capacity of 717 MW equity.

Presently, the company is preparing to invest in five solar power projects with the total installed capacity of 125.4 MW equity after the Energy Regulatory Commission has chosen it to develop the renewable energy power plants under Feed-in Tariff (FiT) Phase 1 since April this year. The five projects are scheduled to start commercial operation (CODs) during 2029-2030.

Furthermore, the company is continuing to expand its power business in both Thailand and Vietnam while applying the application of new technologies and innovations in a continuous business operation to seek opportunities in the New S-Curve business. These include Battery Energy Storage Systems (BESS), Hydrogen, Carbon Trading, and Carbon Capture Utilization and Storage (CCUS).

Currently, the company has collaborated with its partners, PTT and Sertis AI Energy Co., Ltd., under the joint venture “RENEX TECHNOLOGY” to develop and operate the Peer-to-Peer Energy Trading Platform, which will use a two-sided bidding algorithm system and Blockchain technology to enhance transaction security and provide energy-trading convenience to SPPs and end-users. Presently, there are 54 leading operators in WHA Group’s industrial estates showing their interest in joining the RENEX energy trading platform.

Digital Business, WHA Group is committed to leading digital transformation to become a Technology Company as planned in 2024, while thriving a strong organization in the digital era and giving importance on business sustainability. This journey will also build positive changes for environment, society, and economy under its Mission to The Sun (MTTS), in which the Sustainable Development Goals or SDGs set by the United Nations have been incorporated as part of the strategy for developing projects to benefit all stakeholders including customers, employees, shareholders, business partners and Thai society.

These include the Green Logistics project, which promotes the use of green technology in logistics business to enhance the efficiency of energy consumption and lower logistics costs for the country in long term, the Digital Healthcare project, that will improve access to healthcare services and solutions, the Circular project to promote the most beneficial use of resources in the company’s ecosystem. Additionally, the company organized the WHA Innovation Bootcamp #2 project to enhance the potential of people in the organization and encourage them to think creatively and initiate innovative projects, which will further develop into a new business that meets both economic and sustainability goals.

“With its efforts in leading new technologies and innovations to drive the organization forward in all dimensions, the company was awarded Prime Minister Award: Innovation for Global Challenge in the competitiveness during the Startup x Innovation Thailand Expo 2023 or SITE 2023. This prestigious recognition is for organizations that promote and enhance economic competitiveness in the global scene. At the same time, WHA Group and WHA Utilities and Power PLC (WHAUP) received an honorary award for Chief Innovation Officer as the executives play an important role in driving the innovation ecosystem for Thailand and supporting the country’s innovation to become “Nation of Innovation” from the National Innovation Agency,”.

Besides, WHA Group and WHA Industrial Leasehold Real Estate Investment Trust (WHAIR) have been ranked by Thaipat Institute as one of the top 15 securities in the ESG Emerging List, out of 888 companies, funds, and investment trusts. Both WHA Group and WHAIR also made their debut in the ESG100 Index. Meanwhile, WHA Premium Growth Freehold and Leasehold Real Estate Investment Trust (WHART) continues to demonstrate remarkable performance, securing its position in the 2023 ESG 100 investment trusts, for the fifth consecutive year. The achievements reaffirm the unwavering commitment of WHA Group and its affiliated companies to develop sustainable business practices and create long-term investment return opportunities. Recently, the company’s WHA Eastern Seaboard Industrial Estate 2 and WHA Eastern Seaboard Industrial Estate 3 won an Outstanding Award during the Environmental Impact Assessment (EIA) Monitoring Awards 2023 for the industry that complies with measures in the EIA’s 2023 report. This emphasizes the company’s responsibility on solid environmental management and focus on sustainable business development.