CP Axtra Project: Analysts Express Skepticism
CP Axtra, a business unit of Charoen Pokphand (CP) Group, has announced plans for a significant investment in a real estate development project called The Happitat at the Forestias (HFTF), raising concerns among analysts about the company’s financial health and corporate governance.
Investment Details
CP Axtra intends to invest between 12-15 billion baht in the HFTF project, which includes three mall buildings and a central utility plant. The company established a subsidiary, Axtra Growth Plus (AGP), with a registered capital of 8.4 billion baht to fund this project, with CP Axtra holding a 95% stake in AGP.
Financial Concerns
Analysts have expressed skepticism about the investment, citing CP Axtra’s significant existing debt burden and doubts about the project’s potential to generate positive cash flow in the near future. Globlex Securities raised concerns about the company’s decision to take on additional debt for the project, given its current financial position.
Challenges Ahead
The Happitat project faces challenges due to competition from established malls in the area, which could impact its ability to attract consistent foot traffic. Analysts anticipate that the project’s completion is expected in the second half of 2025, with traffic growth projected by 2028.
Market Reaction
Following the announcement of the investment, shares of CP Axtra and CP All, which holds a stake in CP Axtra, experienced a decline for the second consecutive day. Investors have raised concerns about the potential impact of this investment on the company’s performance and future prospects.
Meeting Scheduled
The Association of Investment Management Companies has scheduled a meeting to discuss the implications of this investment for Thai ESG Fund investments in CP Axtra. The outcome of this meeting could impact further investment and transactions involving the company.
Market Performance
Shares of CP Axtra and CP All experienced a decline in value following the announcement of the investment, reflecting investor uncertainty about the company’s strategic decisions and financial health.
In conclusion, CP Axtra’s ambitious investment in The Happitat project has raised questions among analysts and investors about the company’s financial stability and long-term prospects. The outcome of this project and its impact on CP Axtra’s performance will be closely monitored in the coming months.