TRIS Rating Co., Ltd. has assigned "A/Stable" ratings to Land & Houses PLC's (LH) three proposed senior debentures of up to Bt5,000 million. At the same time, TRIS Rating has affirmed the "A+" rating to LH's senior secured debentures (LH06DA) and the "A" ratings to LH's senior debentures (LH063A, LH073A and LH083A) at "A". The ratings are based on LH's 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.
While 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 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 the rising construction costs and the expiration of tax incentives at the end of 2003 lowered the profit margin, LH was able to maintain its operating margin in 2004 at a satisfactory level while keeping its debt to capitalization ratio lower than 50%, in line with TRIS Rating's expectations. - 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 Up to Bt5,000 million senior debentures due 2008-2010 A Rating Outlook: Stable