TRIS Rating Co., Ltd. has affirmed the company rating of Supalai PLC (SPALI) at “BBB+” with “stable” outlook. The rating reflects the ability of SPALI to control operating costs, its long track record in the residential development market, and an accepted brand name in the single detached house (SDH) and condominium markets. The rating also takes into consideration a cyclical downturn in the property development market, slowing demand for residential property due to the uncertain political situation and declining consumer confidence.
The “stable” outlook reflects the expectation that SPALI will be able to complete the construction of its condominiums as planned. As it has been successful in controlling costs and has a healthy balance sheet, SPALI should be able to weather the downturn in the residential market. The company is expected to maintain its conservative financial policy and keep the debt to capitalization ratio at less than 50% in the medium term.
TRIS Rating reported that SPALI was established in 1989 and is one of Thailand’s leading property developers. The company has developed SDH, townhouse, and condominium projects in the Bangkok metropolitan area (BMA) and upcountry. Its products focus on the middle-income market with prices ranging from Bt1-Bt10 million per unit. SPALI’s competitive edge stems from its ability to control operating costs and to offer housing units at competitive prices in various locations.
TRIS Rating said, in 2006, SPALI’s operating performance remained satisfactory, though its residential pre-sales decreased slightly from Bt7,321 million in 2005 to Bt7,226 million in 2006, primarily as a result of the sluggish market. In 2006, SPALI was able to sell 2,394 residential units, 1,711 condominium units, and 683 SDH and townhouses. The average price per unit increased from Bt2 million in 2005 to Bt3 million in 2006. Revenue increased from Bt3,441 million in 2005 to Bt4,598 million in 2006. Profitability remained favorable since operating profit margins averaged 28%-31% for the last two years, leading to pre-tax returns on permanent capital of around 15%-25%. SPALI has been able to keep its financial leverage at an acceptable level, though its project portfolio has grown significantly in recent years.
Political uncertainty has further deteriorated consumer confidence and softened the housing market. Though inflationary pressures and interest rates are easing, demand for residential property is expected to remain soft in 2007-2008, said TRIS Rating. -- End
Supalai PLC (SPALI)
Company Rating: Affirmed at BBB+
Rating Outlook: Stable
----------------------------------------------------------
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 SPALI will be able to complete the construction of its condominiums as planned. As it has been successful in controlling costs and has a healthy balance sheet, SPALI should be able to weather the downturn in the residential market. The company is expected to maintain its conservative financial policy and keep the debt to capitalization ratio at less than 50% in the medium term.
TRIS Rating reported that SPALI was established in 1989 and is one of Thailand’s leading property developers. The company has developed SDH, townhouse, and condominium projects in the Bangkok metropolitan area (BMA) and upcountry. Its products focus on the middle-income market with prices ranging from Bt1-Bt10 million per unit. SPALI’s competitive edge stems from its ability to control operating costs and to offer housing units at competitive prices in various locations.
TRIS Rating said, in 2006, SPALI’s operating performance remained satisfactory, though its residential pre-sales decreased slightly from Bt7,321 million in 2005 to Bt7,226 million in 2006, primarily as a result of the sluggish market. In 2006, SPALI was able to sell 2,394 residential units, 1,711 condominium units, and 683 SDH and townhouses. The average price per unit increased from Bt2 million in 2005 to Bt3 million in 2006. Revenue increased from Bt3,441 million in 2005 to Bt4,598 million in 2006. Profitability remained favorable since operating profit margins averaged 28%-31% for the last two years, leading to pre-tax returns on permanent capital of around 15%-25%. SPALI has been able to keep its financial leverage at an acceptable level, though its project portfolio has grown significantly in recent years.
Political uncertainty has further deteriorated consumer confidence and softened the housing market. Though inflationary pressures and interest rates are easing, demand for residential property is expected to remain soft in 2007-2008, said TRIS Rating. -- End
Supalai PLC (SPALI)
Company Rating: Affirmed at BBB+
Rating Outlook: Stable
----------------------------------------------------------
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.