Thai Rating and Information Services Co., Ltd. (TRIS) announced that it has assigned the company rating of Preuksa Real Estate Co., Ltd. (Preuksa) at "BB+". The rating reflects the company's proven record in developing low-priced residential units and its competitive construction cost. However, these strengths are offset by high dependence on its managing director/owner to run the company, a record of default on debt obligation and the highly cyclical nature of the real estate industry.
TRIS said that Preuksa is a medium-sized housing developer established in 1993 by Mr. Thongma Vijitpongpun who acts as managing director. Since its establishment, the company has been 100% owned and run by the Vijitpongpun family while the Board of Directors comprises representatives of the Vijitpongpun family. Consequently the direction, policy and strategy of the company are decided by the family. From its initial capital of Bt50 million, the company's paid-up capital is currently Bt660 million. Preuksa has developed 11 housing projects and has transferred more than 10,000 units to homebuyers. More than 80% of its housing units to date are two-storey townhouses priced lower than Bt600,000 a unit. Currently, the company is developing three housing projects: Bann Preuksa 8, 10 and 11. Preuksa is successful in developing low-priced townhouses in outlying areas of Bangkok, namely Rangsit, Bangbuathong and Phuttamontol. Its low price strategy is supported by the owner's experiences in contractor businesses. As a contractor-turned developer, the company capably manages nearly all phases of its projects' construction. The Cast Insitu Load Bearing Wall Structure Method used in building its housing projects help save the company time and cost. In addition, the company has received Board of Investment (BOI) promotional privileges to build housing units for low-income buyers. The BOI privileges grant a five-year tax exemption for each project, which helps the company pursue its low price strategy.
TRIS also said that Preuksa's diversification into a condominium project (Baan Preuksa 5) was a negative experience. This project was suspended in 1997, and Preuksa's credit eroded as it stopped developing the project and stopped servicing the project's debt. A debt workout deal was recently concluded, debt payment was set at Bt22.4 million from the original principal of Bt34.7 million. Although this conclusion can improve Preuksa's access to bank financing, its creditworthiness still needs some time to recover favorably.
TRIS reported that the real estate industry is a highly cyclical industry. During the boom time, housing demand outpaces the general economy, but during the bust time, demand drops deeper than the general downturn. Although housing demand has shown gradual recovery since 2000, the continuation of this trend is less than certain. The downward revision of Thailand's GDP growth for 2001 raises concern about the sustainability of housing demand, while the foreclosed property held by financial institutions puts more pressure on the housing supply situation.
Preuksa Real Estate Co., Ltd. (Preuksa) Company Rating BB+
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TRIS said that Preuksa is a medium-sized housing developer established in 1993 by Mr. Thongma Vijitpongpun who acts as managing director. Since its establishment, the company has been 100% owned and run by the Vijitpongpun family while the Board of Directors comprises representatives of the Vijitpongpun family. Consequently the direction, policy and strategy of the company are decided by the family. From its initial capital of Bt50 million, the company's paid-up capital is currently Bt660 million. Preuksa has developed 11 housing projects and has transferred more than 10,000 units to homebuyers. More than 80% of its housing units to date are two-storey townhouses priced lower than Bt600,000 a unit. Currently, the company is developing three housing projects: Bann Preuksa 8, 10 and 11. Preuksa is successful in developing low-priced townhouses in outlying areas of Bangkok, namely Rangsit, Bangbuathong and Phuttamontol. Its low price strategy is supported by the owner's experiences in contractor businesses. As a contractor-turned developer, the company capably manages nearly all phases of its projects' construction. The Cast Insitu Load Bearing Wall Structure Method used in building its housing projects help save the company time and cost. In addition, the company has received Board of Investment (BOI) promotional privileges to build housing units for low-income buyers. The BOI privileges grant a five-year tax exemption for each project, which helps the company pursue its low price strategy.
TRIS also said that Preuksa's diversification into a condominium project (Baan Preuksa 5) was a negative experience. This project was suspended in 1997, and Preuksa's credit eroded as it stopped developing the project and stopped servicing the project's debt. A debt workout deal was recently concluded, debt payment was set at Bt22.4 million from the original principal of Bt34.7 million. Although this conclusion can improve Preuksa's access to bank financing, its creditworthiness still needs some time to recover favorably.
TRIS reported that the real estate industry is a highly cyclical industry. During the boom time, housing demand outpaces the general economy, but during the bust time, demand drops deeper than the general downturn. Although housing demand has shown gradual recovery since 2000, the continuation of this trend is less than certain. The downward revision of Thailand's GDP growth for 2001 raises concern about the sustainability of housing demand, while the foreclosed property held by financial institutions puts more pressure on the housing supply situation.
Preuksa Real Estate Co., Ltd. (Preuksa) Company Rating BB+
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