What is PPS's business model?
We provide services that are used throughout the entire development phase of a project from the pre-construction phase to the facility management or operations of a structure or a building. Within Pre-Construction Phase we offer services ranging from planning to feasibility to design and all elements involved, within the Construction Phase we offer services ranging from EPC to management and control and with all elements involved here as well, and finally with Facility Management and other services we offer claim, marketing, facility management, IOT, IT solutions and so forth for our customers.
Who are PPS's target customers?
As we are a one stop shop of services for construction and facility management our customers are both contractors and project owners, not necessarily at the same time for all projects but it is what we are hoping to achieve in the future. Most of our projects in numbers term come from the private sector and in the past few years we have begun winning projects within the public sectors as well. The projects that we have been a part range from infrastructure, residential and hospital, healthcare, office buildings and modern trade retailers. For example it includes Suvarnabhumi Airport, Icon Siam and Magnolias Waterfront Residences, Siam Sindhorn, Supreme Court of Thailand, Blue Line Project, King Chulalongkorn Memorial Hospital and several Tesco Lotus locations. We have completed over 360 projects with 58% in Bangkok and 42% upcountry.
There have been several changes to PPS’s business structure over the past few years, could you elaborate upon these changes and the expected impact?
PPS wants to have an innovative and international way of work and thus we have been reimaging and rebranding ourselves. And so we are looking at expanding with International Exposure and Services, Potential M&A and PPS Financial Services. Firstly, we have a new partner in One Works which is a global design and consultancy firm that offers an integrated approach to architecture, infrastructure and urban engineering and setup PPS One Works together for Thailand. With PPS One Works we can provide additional technical support, QS and BIM which is a 3D database for the movement of a project which also helps with FM (Facility Management). With the 3D modeling it will change the perception of our business because when projects begin from the drawing board, it takes on several iterations throughout the planning and construction phases before completion. With our new BIM service, we are able to show the changes on a visual basis as well as the changes in costs for the project on a real time basis and this is invaluable for a project owner. The perception change for us will be that this is no longer an intangible service but a tangible one. One Works also recently purchased a company called BIMKeeper, which is valuable as most companies will rely on a third party to manage the database of a project post completion and this becomes a digital asset for us. It transforms our company from being project based to being with the customer at all times, this may lead to facility management in the future, allows for us become scalable, as well as have a recurring income stream. PPS One Works begun a few months ago and has already won a few projects for both QS and BIM services for the major shopping centers and hospitals. To give a clearer picture in financial terms construction management which is our core service is on average 2% of a project value, QS and BIM are also on average 2% thus we effectively double our potential with future projects. The final benefit with PPS One Works is that One Works has capabilities in key transportation projects related to airports, trains which will further enhance the service offerings that we may provide to customers. With PPS Finance, because we fully understand the key factors of development, and that we know where the capital comes from for each project and know the theoretical value of the risk, we feel that there is an opportunity to add a service to our customers. We are potentially looking at providing a source of construction financing to projects, not necessarily from our own balance sheet but from third-parties, there are varies forms that this could take, and we are still investigating what is the best option for all parties involved.
What are the biggest risks facing your business?
The key to expanding into new business segments or into any new endeavor is having capable people and keen management running these new ventures. Because these are new segments for us there will be unknown risks that occur and we are looking for a good team to run these new operations effectively for the group.
PPS financial Performance has been steady yet volatile, could you explain the reasons for this?
This year we still expect at 10% growth for the year however with slightly lower margins. A negative impact for us was from the AOT project as us and several other companies related to this project have yet to be paid since last year, and thus our revenues have equaled costs for this project during the period and so only when it is resolved may we recognise the profits. Also because we are a project based company our earnings are naturally volatile although in the future with our new services we aim to smoothen the volatility.
Where do you see PPS in five years from now?
With our existing and new services our aim is to achieve revenues of THB 1 billion and for the company to go from the Market for Alternative Investments (MAI) to the mainboard the Stock Exchange of Thailand (SET).
The Executive Q&A Series is presented by ShareInvestor, Asia's leading financial internet media and technology company and the largest investor relations network in the region. The interview was conducted by Pon Van Compernolle. For more information, email firstname.lastname@example.org. Website: www.ShareInvestorThailand.com