TRIS Rating Co., Ltd. has assigned the company rating of N.C. Housing ABCPLC (XXXNCH) at "XXXBBB" with "stable" outlook. . XXX. The rating reflects NCHs 's track record in the middle- to low-income housing market, its recognized "Baan Pha" brand name and its acceptable financial profile. These strengths are partially offset by the intense competition, slowing demand growth and cyclical nature of the real estate industry. The "stable" outlook reflects the expectation that NCH will be able to maintain its performance at an acceptable level, even though the property market is slowing down. NCH is expected to maintain its target leverage of one time in the medium term.
TRIS Rating reported that NCH is a listed medium-sized housing developer, established in 1994 by Mr. Namchai Tanterdtham. Since its establishment, the Tanterdtham family has owned the majority of shares and controlled the company's direction. As of September 2004, the Tanterdtham family and relatives owned 79% of NCH's shares. Mr. Somchao Tanterdtham, Mr. Namchai's son, serves as NCH's Managing Director, and directs the company's strategy. NCH entered the market, under its "Baan Pha" brand name, by focusing on the middle- to low-income housing market. The "Baan Pha" brand has become well known in the northern zone of the Bangkok Metropolitan Area (BMA). As of September 2004, NCH had developed 27 housing projects, delivering approximately 6,800 units to homebuyers during its ten-year history. Single detached houses account for the majority of the company's sales.
TRIS Rating said NCH currently has 14 projects in development with a total of 3,090 units valued at Bt9,279 million. In 2004, the company launched three projects: Baan Pha Piyarom phase 7 (276 units), Baan Pha Green Park Royal Thonburirom (239 units), and Baan Pha Rim Had (93 units). NCH plans to launch two new projects, Baan Pha Piyarom phase 8 (368 units) and Baan Pha Piyarom phase 9 (190 units), by the first half of 2005. Baan Pha Piyarom, NCH's largest housing project, has successfully created brand awareness and recognition for the "Baan Pha" brand. The Baan Pha Piyarom project comprises 893 rai of land plots in northern Bangkok, with 500 rai as yet undeveloped, providing NCH with enough land for four to five years worth of future developments. The company has expanded its customer base to include the southern and western parts of the BMA but the majority of its projects remain in northern Bangkok.
NCH's strategy of redeveloping non-performing assets (NPA) purchased from financial institutions has been successful. Its products are price competitive and its after-sales service has enhanced the company's reputation as one of the leading developers of middle- to low-income housing in northern Bangkok. The company's different product offerings (pre-built, semi-pre-built and pre-sale) enable the company to capture a wide range of customers. NCH entered into a debt restructuring process in 1997 and signed restructuring agreements with its creditors in October 1998. NCH's restructured repayments were set at Bt1,246 million, with no principal deductions, but extended the repayment period. As a result, the company's total debt-to-capitalization ratio peaked at 121.4% in 2000. The ratio improved significantly in recent years, falling to 57.0% in 2003 and 37.7% at the end of September 2004. NCH's performance during the past few years has been satisfactory. For the first nine months of 2004, NCH earned Bt1,743 million in total revenue, a figure equal to approximately 73% of total revenue in 2003. The company's current profitability is relatively moderate, when compared with its peers. Its adjusted operating margin was 12.0% for the first nine months of 2004, down from 15.4% in December 2003. Pretax return on permanent capital also improved, from 10.8% in 2001 to 25.3% in 2002, but decreased to 20.3% in 2003 and to 7.3% (non-annualized) for the first nine months of 2004.
TRIS Rating said competition in the housing market in 2004-2005 has intensified as more developers entered the market, while rising interest rates, oil prices, and construction costs, have adversely affected real estate demand and operators' margins. The Bank of Thailand's regulations requiring financial institutions to control down payments for luxury housing (houses with selling prices over Bt10 million per unit) and stricter reporting requirements for pre-financing loans have reduced housing affordability and limited supply in the residential market - End
N.C. Housing ABCPLC (XXXNCH) Company Rating: BBB Rating Outlook: Stable