TRIS Rating Co., Ltd. has assigned the company rating of Asian Property Development PLC (AP) and the rating of AP’s proposed up to Bt3,000 million senior debentures at “BBB+” with “stable” rating outlook. The ratings reflect the company’s track record in the residential property development, its accepted brand in the downtown townhouse market, and its ability to acquire prime land for development. The ratings also take 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 AP will be able to manage the construction of its condominium projects and transfer in accordance with plans. The company is expected to maintain its conservative financial policy to mitigate increasing business risks since the portfolio is shifting more towards condominium development.
TRIS Rating reported that AP was established in 1990 by Mr. Anuphong Assavabhokhin and Mr. Pichet Vipavasuphakorn who together own 36% of the company. During the last four years, AP’s sales averaged Bt5,000 million per year from townhouses (70%-80%), condominiums (11%-15%), and single detached houses (5%-15%). AP’s main competitive edge stems from its discipline to focus on developing downtown residential property and its ability to acquire land in prime locations. The average price for the overall portfolio fell to Bt3.9 million, reflecting a strategic shift towards the medium-priced segment. As of May 2007, the company had 25 residential projects on hand worth Bt31,000 million. In terms of project value, townhouses constituted 45% while condominiums and single detached houses (SDHs) accounted for 35% and 20%, respectively. Due to its strategy to develop more condominium projects, the revenue contribution from condominiums is expected to increase to 40%-50% during the next three years.
TRIS Rating said, AP’s residential sales performance for the first three months of 2007 dropped as the market slowed. Revenue from residential sales grew from Bt5,258 million in 2005 to Bt6,344 million in 2006, but slightly dropped to Bt1,415 million for the first three months of 2007, a 9% decrease from Bt1,546 million during the same period of 2006. However, the company successfully launched condominium projects which doubled presales from Bt1,693 million in the first quarter of 2006 to Bt3,541 million in the same period of 2007.
AP’s leverage improved in 2006, after peaking in 2005. Its debt to total capitalization ratio decreased
from 57% at the end of 2005 to 43% for the first quarter of 2007. However, this ratio is expected to increase when construction begins for recently launched condominium projects. Competition in the residential
property market continues to pressure profitability. AP’s operating income before depreciation and amortization as percentage of sales continued to decrease, falling from 31% in 2004 to 17% for the first three months of 2007 since there has been more newcomers entering the townhouse market and higher selling, general, and administrative expenses (SG&A) from condominium launches in recent years.
TRIS Rating said, 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. -- End
Asian Property Development PLC (AP)
Company Rating: BBB+
Issue Rating:
Up to Bt3,000 million senior debentures due 2010-2012 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 AP will be able to manage the construction of its condominium projects and transfer in accordance with plans. The company is expected to maintain its conservative financial policy to mitigate increasing business risks since the portfolio is shifting more towards condominium development.
TRIS Rating reported that AP was established in 1990 by Mr. Anuphong Assavabhokhin and Mr. Pichet Vipavasuphakorn who together own 36% of the company. During the last four years, AP’s sales averaged Bt5,000 million per year from townhouses (70%-80%), condominiums (11%-15%), and single detached houses (5%-15%). AP’s main competitive edge stems from its discipline to focus on developing downtown residential property and its ability to acquire land in prime locations. The average price for the overall portfolio fell to Bt3.9 million, reflecting a strategic shift towards the medium-priced segment. As of May 2007, the company had 25 residential projects on hand worth Bt31,000 million. In terms of project value, townhouses constituted 45% while condominiums and single detached houses (SDHs) accounted for 35% and 20%, respectively. Due to its strategy to develop more condominium projects, the revenue contribution from condominiums is expected to increase to 40%-50% during the next three years.
TRIS Rating said, AP’s residential sales performance for the first three months of 2007 dropped as the market slowed. Revenue from residential sales grew from Bt5,258 million in 2005 to Bt6,344 million in 2006, but slightly dropped to Bt1,415 million for the first three months of 2007, a 9% decrease from Bt1,546 million during the same period of 2006. However, the company successfully launched condominium projects which doubled presales from Bt1,693 million in the first quarter of 2006 to Bt3,541 million in the same period of 2007.
AP’s leverage improved in 2006, after peaking in 2005. Its debt to total capitalization ratio decreased
from 57% at the end of 2005 to 43% for the first quarter of 2007. However, this ratio is expected to increase when construction begins for recently launched condominium projects. Competition in the residential
property market continues to pressure profitability. AP’s operating income before depreciation and amortization as percentage of sales continued to decrease, falling from 31% in 2004 to 17% for the first three months of 2007 since there has been more newcomers entering the townhouse market and higher selling, general, and administrative expenses (SG&A) from condominium launches in recent years.
TRIS Rating said, 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. -- End
Asian Property Development PLC (AP)
Company Rating: BBB+
Issue Rating:
Up to Bt3,000 million senior debentures due 2010-2012 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.