TRIS Rating Co., Ltd. has affirmed the rating of Bt1,100 million senior secured debentures (GOLD088A)
of Golden Land Property Development PLC (GOLD) at “BBB” with “stable” outlook. The rating reflects GOLD’s accepted brand name in the high-income housing market, the company’s ability to maintain favourable profit margins, and more recurring income from its serviced apartments. These strengths are partly offset by GOLD’s highly leveraged balance sheet and the cyclical nature of the property development market. A slowdown in demand for residential property due to declining consumer confidence and high interest rates and construction costs remains a concern. The rating also takes into consideration the land and buildings pledged as collateral throughout the life of the debentures, which are valued at 1.34 times GOLD’s outstanding debentures.
The “stable” outlook reflects the expectation that GOLD will be able to manage the construction of
The Infinity project in accordance with its original plans. The development of GOLD’s new high-rise projects is expected to be conservatively financed to maintain a target debt to capitalization ratio of 50%-60% in the medium term.
TRIS Rating reported that GOLD is a medium-sized property developer which develops single detached house (SDH) projects and condominium projects for high-income homebuyers in the Bangkok Metropolitan Area (BMA). GOLD also owns two serviced apartments, Mayfair Mariott and The Ascott Sathorn, that target tourists and expatriates. GOLD’s competitive edge stems from its track record of developing high-priced residential projects in prime locations. GOLD’s new SDH bookings have declined since 2005. From a peak of 320 units in 2004, new SDH sales declined to 200 units in 2005 and to 54 units for the first half of 2006. However, two condominium projects were successfully launched in 2004-2005. As of June 2006, the company’s backlog stood at Bt3,800 million for SDH projects and Bt2,217 million for condominium projects.
TRIS Rating said, GOLD’s financial profile slightly deteriorated in 2006 as a result of declining cash flow from condominium sales. Funds from operations decreased from Bt394 million in 2004 to Bt324 million in 2005 and to Bt85 million (non-annualized) in the first half of 2006. GOLD’s debt-to-capitalization ratio slightly decreased to 50% as of June 2006 but is expected to rise in the near future as construction of The Infinity progresses. Looking forward, GOLD continues its policy to focus on SDH units priced more than Bt10 million each. With large land plots in existing SDH projects and its made-to-order strategy, the company may require a modest amount of funding for its new SDH projects. However, for its mixed used high-rise project, a substantial investment of Bt5,000-Bt6,000 million will be needed for development during the next three years.
TRIS Rating sees that the military coup d’etat on 19 September 2006 will have no immediate impact on housing demand. Though the new interim government is expected to ease the political tension in the country, consumer confidence has yet to improve. Residential demand is expected to continue to be soft in the near future, though inflationary pressures and high interest rates are expected to be alleviated next year. — End
Golden Land Property Development PLC (GOLD)
Issue Rating:
GOLD088A: Bt1,100 million senior secured debentures due 2008 Affirmed at BBB
Rating Outlook: Stable
-----------------------------------------------------------------------
Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
of Golden Land Property Development PLC (GOLD) at “BBB” with “stable” outlook. The rating reflects GOLD’s accepted brand name in the high-income housing market, the company’s ability to maintain favourable profit margins, and more recurring income from its serviced apartments. These strengths are partly offset by GOLD’s highly leveraged balance sheet and the cyclical nature of the property development market. A slowdown in demand for residential property due to declining consumer confidence and high interest rates and construction costs remains a concern. The rating also takes into consideration the land and buildings pledged as collateral throughout the life of the debentures, which are valued at 1.34 times GOLD’s outstanding debentures.
The “stable” outlook reflects the expectation that GOLD will be able to manage the construction of
The Infinity project in accordance with its original plans. The development of GOLD’s new high-rise projects is expected to be conservatively financed to maintain a target debt to capitalization ratio of 50%-60% in the medium term.
TRIS Rating reported that GOLD is a medium-sized property developer which develops single detached house (SDH) projects and condominium projects for high-income homebuyers in the Bangkok Metropolitan Area (BMA). GOLD also owns two serviced apartments, Mayfair Mariott and The Ascott Sathorn, that target tourists and expatriates. GOLD’s competitive edge stems from its track record of developing high-priced residential projects in prime locations. GOLD’s new SDH bookings have declined since 2005. From a peak of 320 units in 2004, new SDH sales declined to 200 units in 2005 and to 54 units for the first half of 2006. However, two condominium projects were successfully launched in 2004-2005. As of June 2006, the company’s backlog stood at Bt3,800 million for SDH projects and Bt2,217 million for condominium projects.
TRIS Rating said, GOLD’s financial profile slightly deteriorated in 2006 as a result of declining cash flow from condominium sales. Funds from operations decreased from Bt394 million in 2004 to Bt324 million in 2005 and to Bt85 million (non-annualized) in the first half of 2006. GOLD’s debt-to-capitalization ratio slightly decreased to 50% as of June 2006 but is expected to rise in the near future as construction of The Infinity progresses. Looking forward, GOLD continues its policy to focus on SDH units priced more than Bt10 million each. With large land plots in existing SDH projects and its made-to-order strategy, the company may require a modest amount of funding for its new SDH projects. However, for its mixed used high-rise project, a substantial investment of Bt5,000-Bt6,000 million will be needed for development during the next three years.
TRIS Rating sees that the military coup d’etat on 19 September 2006 will have no immediate impact on housing demand. Though the new interim government is expected to ease the political tension in the country, consumer confidence has yet to improve. Residential demand is expected to continue to be soft in the near future, though inflationary pressures and high interest rates are expected to be alleviated next year. — End
Golden Land Property Development PLC (GOLD)
Issue Rating:
GOLD088A: Bt1,100 million senior secured debentures due 2008 Affirmed at BBB
Rating Outlook: Stable
-----------------------------------------------------------------------
Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.