A weak market in the fourth quarter of 2024 could lead Land & Houses (LH) and its subsidiary, Quality Houses (QH), to adopt a more cautious approach to new project launches in 2025, according to Kasikorn Securities.

Sorapong Jakteerungkul, an analyst at Kasikorn Securities Plc, said weak presales for LH and QH in the fourth quarter of 2024 could affect quarterly profits, making their performance in 2025 weaker than previously anticipated.

"We estimated LH's presales at 4.1 billion baht in the fourth quarter of 2024, a 52% year-on-year and 14% quarter-on-quarter decline, despite launching 12.2-billion-baht's worth of new supply -- the largest for the year from a total of 30.8 billion baht."

The major factor behind the presales drop was a strong performance from a new 15-billion-baht condo project launched in the fourth quarter of 2023, while no similar project was introduced during the same period in 2024.

In 2024, LH recorded 18.7 billion baht in presales, 39.5% below its target of 31 billion baht and an 18.4% decline from 23 billion baht in 2023. This continued the decline from 30.2 billion baht in 2022.

Given the 2024 presales performance and weak demand expected in the first half of 2025, LH will likely focus on clearing existing inventory. Its strategy for 2025 is expected to be conservative regarding new project launches.

Kasikorn Securities has adjusted down its profit forecast for LH by 14-19% due to these factors, along with the outlook for its subsidiary QH, which is following a similar trajectory.

QH's outlook mirrors LH, with equity income from QH also projected to decline. In the fourth quarter of 2024, QH's presales reached 1.4 billion baht, a 22% year-on-year rise but a 15% quarter-on-quarter decrease.

Despite launching 6 billion baht in new projects -- the largest in 2024, representing 61% of annual launches of 9.8 billion baht -- QH's presales were underwhelming due to weak market conditions, even during the typically strong fourth quarter.

In 2024, QH's presales tallied 7.1 billion baht, 23% below its target of 9.25 billion baht and 5.8% lower than 2023's 7.54 billion baht, which was an 8.1% decline from 8.2 billion baht recorded in 2022.

With subdued performance and a conservative outlook, QH's 2025 business plan will likely include fewer new launches than in 2024. Most new projects will focus on low-rise houses, which have shown slower growth than condos.

Compared to other developers focusing on low-rise housing, QH's profit volatility is lower. Over 80% of its profit stems from equity income from Home Product Center and Land & Houses Bank, which are less volatile than real estate.