TRIS Rating Co., Ltd. has upgraded the company rating of Rojana Industrial Park PLC (Rojana) to “A-” from “BBB+” with “stable” outlook. The upgrade is based upon the increasing contribution of reliable income from the company’s power generating business, its proven record in industrial property development, and strong support from its Japanese partner. The rating also takes into consideration the volatile nature of the industrial property market and the current slowdown of the Thai economy, due to political uncertainty and regulatory concerns.
The “stable” outlook reflects the expectation that Rojana will be able to maintain its good position
in industrial property development. Its power plant is expected to generate reliable cash flow to enable
the company to withstand the fluctuations in industrial land sales. Though Rojana’s leverage will remain high during the next two years, the debt to capitalization ratio is expected to remain below 60% in the medium term.
TRIS Rating reported that Rojana is one of the leading industrial property developers in Thailand. It was established in 1988 by the Vinichbutr family and the Sumitomo Group. As of October 2006, Sumikin Bussan Corporation, a subsidiary of the Sumitomo Group, held a 27.4% stake in the company, while the Vinichbutr family held 21.2%. Rojana currently owns and operates two industrial parks in Ayudhya and Rayong provinces. During 2004-2006, the company’s land sales averaged 514 rai per year, with cumulative land sales of approximately 4,450 rai as of December 2006. Based on its average land sales of 500 rai per year, the remaining salable area of approximately 3,400 rai is sufficient for future development. Rojana has its own power plant, Rojana Power Co., Ltd. (Rojana Power), within its Ayudhya industrial park. Rojana Power’s electricity generation has continuously increased, from 122 megawatts (MW) to 208 MW by 2006 and to 267 MW by 2008, along with the company’s increasing cumulative land sales and customers. Approximately 90 MW of electricity is sold to The Electricity Generating Authority of Thailand (EGAT) under the Small Power Producer (SPP) scheme, with the remainder sold to Rojana’s industrial customers. Electricity and water sales contributed approximately two-third of the company’s total revenue and 60% of total earnings before interest, tax, depreciation and amortization (EBITDA) during 2004-2006.
TRIS Rating said, Rojana was able to sell 552 rai of industrial land for 2006. Though this was 9% lower than its land sales in 2005, the company continued to outperform the industry. Due to the uncertain political situation, Thailand’s industrial land sales in 2006 were 2,865 rai, a 29% decline from 2005. Rojana’s electricity sales, however, continued to increase to Bt3,530 million due to the company’s growing industrial users and its long-term offtake contracts with EGAT. The company’s diversification into condominium development was moderately satisfactory due to a good location on Sukhumvit 41.
As of December 2006, the Bt2,000 million project was 95% sold with a completion date target in the first half of 2007.
The slowdown in the industrial estate sector is mainly the result of political uncertainty and declining investor confidence. However, in the medium- to long-term, overall prospects for the industrial property sector remain good. Foreign investment and international trade promotion policies, together with Thailand’s ideal geographical location, continue to attract foreign investors, said TRIS Rating. -- End
Rojana Industrial Park PLC (Rojana)
Company Rating: Upgraded to “A-” from “BBB+”
Rating Outlook: Stable
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Copyright 2007, 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.
The “stable” outlook reflects the expectation that Rojana will be able to maintain its good position
in industrial property development. Its power plant is expected to generate reliable cash flow to enable
the company to withstand the fluctuations in industrial land sales. Though Rojana’s leverage will remain high during the next two years, the debt to capitalization ratio is expected to remain below 60% in the medium term.
TRIS Rating reported that Rojana is one of the leading industrial property developers in Thailand. It was established in 1988 by the Vinichbutr family and the Sumitomo Group. As of October 2006, Sumikin Bussan Corporation, a subsidiary of the Sumitomo Group, held a 27.4% stake in the company, while the Vinichbutr family held 21.2%. Rojana currently owns and operates two industrial parks in Ayudhya and Rayong provinces. During 2004-2006, the company’s land sales averaged 514 rai per year, with cumulative land sales of approximately 4,450 rai as of December 2006. Based on its average land sales of 500 rai per year, the remaining salable area of approximately 3,400 rai is sufficient for future development. Rojana has its own power plant, Rojana Power Co., Ltd. (Rojana Power), within its Ayudhya industrial park. Rojana Power’s electricity generation has continuously increased, from 122 megawatts (MW) to 208 MW by 2006 and to 267 MW by 2008, along with the company’s increasing cumulative land sales and customers. Approximately 90 MW of electricity is sold to The Electricity Generating Authority of Thailand (EGAT) under the Small Power Producer (SPP) scheme, with the remainder sold to Rojana’s industrial customers. Electricity and water sales contributed approximately two-third of the company’s total revenue and 60% of total earnings before interest, tax, depreciation and amortization (EBITDA) during 2004-2006.
TRIS Rating said, Rojana was able to sell 552 rai of industrial land for 2006. Though this was 9% lower than its land sales in 2005, the company continued to outperform the industry. Due to the uncertain political situation, Thailand’s industrial land sales in 2006 were 2,865 rai, a 29% decline from 2005. Rojana’s electricity sales, however, continued to increase to Bt3,530 million due to the company’s growing industrial users and its long-term offtake contracts with EGAT. The company’s diversification into condominium development was moderately satisfactory due to a good location on Sukhumvit 41.
As of December 2006, the Bt2,000 million project was 95% sold with a completion date target in the first half of 2007.
The slowdown in the industrial estate sector is mainly the result of political uncertainty and declining investor confidence. However, in the medium- to long-term, overall prospects for the industrial property sector remain good. Foreign investment and international trade promotion policies, together with Thailand’s ideal geographical location, continue to attract foreign investors, said TRIS Rating. -- End
Rojana Industrial Park PLC (Rojana)
Company Rating: Upgraded to “A-” from “BBB+”
Rating Outlook: Stable
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Copyright 2007, 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.