TRIS Rating has assigned the rating of “BBB-” to the proposed issue of up to Bt1,500 million in senior debentures of Noble Development PLC (NOBLE). At the same time, TRIS Rating has also affirmed the company rating of NOBLE at “BBB” and has affirmed the existing ratings of its senior debentures at “BBB-”. The outlook remains “stable”. The proceeds from the new debentures will be used for debt repayment, project development, and working capital. NOBLE’s ratings reflect the company’s well-accepted brand in the middle- to high-end segments of the residential property market and its product differentiation strategy. The ratings are constrained by concentration risk from a huge investment in the Noble Ploenchit condominium project with the project value of Bt15,600 million, an increase in financial leverage, along with the cyclical nature of the property development industry, plus concerns over labor shortage and rising land and construction costs. The ratings of NOBLE’s senior debentures are one notch below the company rating due to the high level of secured debts compared with total assets. The “stable” outlook reflects the expectation that NOBLE will be able to launch and deliver its projects as planned. Leverage is expected to rise during the construction period of the Noble Ploenchit project. However, the company is anticipated to keep its net debt to equity ratio below 2 times.
NOBLE is a medium-sized property developer in Thailand. The company was established in 1991 and listed on the Stock Exchange of Thailand (SET) in 1996. The Thanakitamnuay family and related families remain the company’s major shareholders, with a combined 12% stake as of May 2013. NOBLE’s unique designs for every product type differentiate its products from other developers. The company has focused on developing condominium projects since 2006 as market preferences have shifted to urban living. At the end of May 2013, NOBLE had 16 existing projects available for sale with remaining value of approximately Bt11,600 million. The company had a backlog worth around Bt13,300 million. The units in the backlog will be delivered to customers from now through 2017. As of May 2013, the residential project portfolio comprises condominiums (83% of total project value), single detached houses (SDHs, 8%), townhouses (6%), and land plots (3%).
NOBLE’s presales in 2012 sharply decreased to Bt2,852 million from Bt7,516 million in 2011. The drop in presales was due in part to the fact that NOBLE launched only one condominium project in 2012: Noble Revolve Aree. In addition, presales at the Noble Ploenchit project were lower than expected. However, presales in the first five months of 2013 rose to Bt2,910 million from Bt683 million in the same period of 2012 due to introduction of a new condominium project, Noble Revolve Ratchada. Total revenues in 2012 were Bt2,560 million, down by 12% from Bt2,910 in 2011 due to the delays in the transfer of finished units in the Noble Reform project. However, revenues in the first three months of 2013 sharply rose to Bt1,305 million from Bt447 million in the same period of prior year since most of the units in Noble Reform were transferred in this quarter.
NOBLE’s gross profit margins had remained high, at 38%-39% during 2011 through the first quarter of 2013. The operating margins (operating income before depreciation and amortization as a percentage of sales) increased to 22.54% in the first three months of 2013 from 20.44% in 2012. As of March 2013, total debt slightly increased to Bt8,163 million from Bt7,806 million at the end of 2012. Most of the debts came from the investment in the Noble Ploenchit project. NOBLE’s total debt to capitalization ratio was 65.62% as of March 2013, up from 61.86% at the end of 2011. However, the company has no liquidity concern since the company maintains a substantial amount of cash on hand. ? Noble Development PLC (NOBLE) Company Rating: BBB Issue Ratings: NOBLE146A: Bt1,500 million senior debentures due 2014 BBB- NOBLE158A: Bt1,500 million senior debentures due 2015 BBB- Up to Bt1,500 million senior debentures due within 2016 BBB- Rating Outlook: Stable
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