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TRIS Rating Co., Ltd. has affirmed the ratings of Land & Houses PLC's (LH) senior secured debentures (LH06DA) and senior debentures (LH063A, LH073A, LH083A) at "A+" and "A", respectively. The rating outlook remains "stable". LH's creditworthiness is based on its sustainable leadership position in the Thai residential market, its strong brand recognition, the proficiency of its experienced management team and its strong financial position. However, these strengths are partially offset by the highly cyclical nature of the real estate industry and continued intense competition as more developers have entered the market at a time when the market is slowing down due to the impact of increasing interest rates, oil prices, and construction costs.
TRIS Rating said that the "stable" outlook reflects LH's sustainable leading position in the property sector. It is expected that LH will continue to maintain its products quality, strong brand recognition and strong financial profile at this level. With its cost efficiencies and faster rate of construction, the company is expected to maintain its profit margin at a favorable level, even in light of weak market conditions.
TRIS Rating also said that with the success of LH's "pre-built home" concept, which is the result of the company's comprehensive market research, LH enjoys economies of scale, shortened construction times, cost efficiencies and faster cash flow generation than its competitors. Though several developers reported negative growth in 2004, LH is one of only a few developers that has had positive growth, and the company was able to maintain its operating margin at almost 30% while keeping its debt to capitalization ratio lower than 50%.-- End
Land & Houses PLC (LH) Issue Ratings: LH06DA: Bt1,500 million senior secured debentures due 2006 Affirmed at A+ LH063A: Bt1,000 million senior debentures due 2006 Affirmed at A LH073A: Bt1,000 million senior debentures due 2007 Affirmed at A LH083A: Bt1,000 million senior debentures due 2008 Affirmed at A Rating Outlook: Stable
TRIS Rating said that the "stable" outlook reflects LH's sustainable leading position in the property sector. It is expected that LH will continue to maintain its products quality, strong brand recognition and strong financial profile at this level. With its cost efficiencies and faster rate of construction, the company is expected to maintain its profit margin at a favorable level, even in light of weak market conditions.
TRIS Rating also said that with the success of LH's "pre-built home" concept, which is the result of the company's comprehensive market research, LH enjoys economies of scale, shortened construction times, cost efficiencies and faster cash flow generation than its competitors. Though several developers reported negative growth in 2004, LH is one of only a few developers that has had positive growth, and the company was able to maintain its operating margin at almost 30% while keeping its debt to capitalization ratio lower than 50%.-- End
Land & Houses PLC (LH) Issue Ratings: LH06DA: Bt1,500 million senior secured debentures due 2006 Affirmed at A+ LH063A: Bt1,000 million senior debentures due 2006 Affirmed at A LH073A: Bt1,000 million senior debentures due 2007 Affirmed at A LH083A: Bt1,000 million senior debentures due 2008 Affirmed at A Rating Outlook: Stable