TRIS Rating Co., Ltd. has assigned the rating of “A+” to the proposed issue of up to Bt1,000 million in senior debentures of Central Pattana PLC (CPN). At the same time, TRIS Rating has affirmed the company rating of CPN and the ratings of CPN’s existing senior debentures at “A+” with “stable” outlook. The ratings reflect the company’s leading position in the retail property development industry, proven record in managing high-quality shopping centers, reliable cash flow from contract-based rental and service income, and conservative financial policy. The ratings also take into consideration the large amount of capital expenditures needed for project expansion during 2012-2014. The “stable” outlook reflects the expectation that CPN will continue to maintain its strong operating performance for its shopping center portfolio. Despite substantial capital expenditures planned for 2012-2014, the company is expected to continue its conservative financial policy by maintaining the target net debt to equity ratio at less than one time in the medium term.
TRIS Rating reported that CPN is the largest developer of retail property in Thailand. Its major shareholders are the Chirathivat family (32%) and Central Holding Co., Ltd. (27%), the leading retailer in Thailand. The ownership link with the Central Group is seen as a benefit since Central Department Store has been a strong magnet for shopping centers owned by CPN. As of March 2012, CPN managed 18 shopping centers, with total leasable space of 1,101,150 square meters (sq.m.). The centers are located in Bangkok and other major cities in Thailand. CPN has long been the market leader in the Thai retail property industry, holding 22% market share of total retail space in Greater Bangkok, as of June 2011. In 2011, CPN’s market share was slightly lower than the previous year, as most of CPN’s new shopping centers were located in provincial areas.
TRIS Rating said, CPN’s solid operating performance is attributable to high occupancy rates (OR) and healthy same-store sales growth for its shopping centers. The OR of CPN’s shopping centers averaged 97.1% per annum during 2007 through the first quarter of 2012, better than the industry average of 92.5% during 2007 through 2011. CPN opened three new shopping centers in 2011, namely CentralPlaza Chiangrai, CentralPlaza Phitsanulok, and CentralPlaza Grand Rama 9. The OR of these new shopping centers hit 97%-100% in the first quarter of 2012. The company’s same-store sales grew by 9% year-on-year (y-o-y) in 2011 and its rental and service income increased by 10% y-o-y to Bt10,853 million in 2011. During the first three months of 2012, rental and service income was Bt3,577 million, up 36% from Bt2,622 million during the same period of 2011. The growth was due primarily to the continuous improvement of CentralWorld, the reopening of CentralPlaza Lardprao, and new shopping centers launched in 2011.
CPN’s operating income before depreciation and amortization as a percentage of rental and service income and sales soared to 53.05% in the first quarter of 2012 from 41%-42% during 2009-2011 because CPN was able to command higher rental rate at all properties. Cash flow protection improved as the ratio of funds from operations (FFOs) to total debt increased to 4.81% (non-annualized) during the first quarter of 2012 from 3.80% (non-annualized) during the same period of 2011. The relaunch of CentralPlaza Lardprao in August 2011 and new shopping centers opened in 2011 caused cash flow protection stronger. CPN incurred more debt to fund its capital expenditures. The total debt to capitalization ratio rose to 55% as of March 2012, up from approximately 50% at the end of 2010. During 2012-2014, CPN will require fundings of around Bt9,000-Bt13,000 million per annum for expansion. The company plans to fund these investments by using a combination of operating cash flow, new borrowings, and asset lease to a property fund, said TRIS Rating. — End
Company Rating: Affirmed at A+ Issue Ratings: CPN126A: Bt3,000 million senior debentures due 2012 Affirmed at A+ CPN135A: Bt2,000 million senior debentures due 2013 Affirmed at A+ CPN136A: Bt1,200 million senior debentures due 2013 Affirmed at A+ CPN145A: Bt1,000 million senior debentures due 2014 Affirmed at A+ CPN164A: Bt1,000 million senior debentures due 2016 Affirmed at A+ CPN16OA: Bt1,200 million senior debentures due 2016 Affirmed at A+ CPN18OA: Bt500 million senior debentures due 2018 Affirmed at A+ CPN21OA: Bt300 million senior debentures due 2021 Affirmed at A+ Up to Bt1,000 million senior debentures due within 2017 A+ Rating Outlook: Stable
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