MBK puts hospital project on hold

MBK Plc, the operator of MBK Center shopping mall in Bangkok, has suspended its planned expansion into the hospital business and slowed investment in the retail and property sectors due to the unfavourable economic and political situation.

Chairman Banterng Tantivit said the company had spent years conducting a feasibility study for investment in the hospital industry but decided to put the plan on hold.

Its board agreed to focus on its Pathumwan Princess Hotel and its retail, property, golf course and rice businesses.

MBK had estimated it would lose 500-600 million baht in sales if anti-government protesters continued to rally in front of MBK Center until June, but protesters decided to leave the site and move to Lumpini Park.

The company adjusted the loss to only 80 million baht in the first quarter, mainly from lacklustre business from the mall and hotel.

After a shareholders' meeting yesterday, Mr Banterng said the board agreed to spend 1 billion baht to improve business this year.

Half the money will be used to develop the Quinn condominium project on Ratchadaphisek Road and the other half for a facelift for MBK Center.

Chief executive Suvait Theeravachirakul said sales look set to grow by only 3% this year with flat net profit growth if the political conflict stretches into mid-year.

Sales may show flat growth or even decline, while net profit will fall by more than 5% if the situation drags on until the year-end, he said.

MBK earlier projected 2014 revenue would rise by 5% from 9.27 billion baht last year, when its net profit surged 11% to 4.1 billion.

Of last year's revenue, 3.79 billion baht came from the company's shopping centre business, 1.21 billion from the hotel, 2.21 billion from food, 1.17 billion from financial services, 382 million from golf, 329 million from property and 160 million from other sectors including used-car auctions.

"We have delayed several property projects including the 800-million-baht Skywalk project for MBK Center due to the economic and political difficulties. We're putting on hold the hospital investment to focus on our existing businesses,” Mr Suvait said.

MBK owns 15% of Siam Piwat Co, which will develop a 35-billion-baht mixed-use commercial complex on one bank of the Chao Phraya River.

The Charoen Nakhon Road project, which is a partnership between Siam Piwat and Charoen Pokphand Group, will comprise a shopping centre, condominiums and an office building.

The development will be aimed at both Thai and foreign customers.

"We decided to reduce rental fees for all tenants at MBK Center by 20% during the protests. Our Pathumwan Princess Hotel's occupancy also dropped significantly during the demonstration, to 40% from 80%, but now its occupancy is improving to more than 50%," Mr Suvait said.

MBK Center shopping mall contributes 40% of sales revenue.

Shares of MBK closed yesterday on the Stock Exchange of Thailand at 145.50 baht, up 50 satang, in trade worth 2.55 million baht.

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