TRIS Rating Co., Ltd. has affirmed the ratings of Lalin Property PLC’s (LALIN) senior debentures at “BBB+” with “negative” outlook. The ratings reflect the company’s track record in the middle-income housing market, its cost competitive position and its healthy balance sheet. The ratings also take into consideration the company’s weaker operating performance, slowing demand for residential property as a result of lower-than-expected GDP growth, an unstable political situation, and declining consumer confidence.
The “negative” outlook reflects the additional pressure on already-deteriorating performance of the company due to the slowdown in SDH market. The outlook may be revised to “stable” if LALIN could be able to improve its performance back to normalized level, while further deterioration in its performance could lead to a downgrade.
TRIS Rating reported that LALIN is a medium-sized housing developer established in 1988 by Mr. Taveesak Watcharakkawongse and Mr. Chaiyan Chakarakul, who have consistently held two-thirds of the company’s shares. LALIN develops housing projects primarily in the Bangkok Metropolitan Area (BMA). Its main housing products are single detached houses (SDH), twin houses, and townhouses with an average price of Bt3 million per unit. The company’s competitive advantage stems from its ability to control construction and overhead costs, which enables the company to offer lower prices while achieving favorable profit margins.
TRIS Rating said that LALIN’s operating performance continued to deteriorate in 2007. Due to the slowdown in the SDH market, its sales continuously declined from Bt729 million in the fourth quarter of 2005 to Bt212 million in the first quarter of 2007. Its net profit during the first quarter of 2007 sharply dropped to Bt28 million, compared to Bt80 million in the prior quarter. Despite lower, LALIN’s cash flow from operation remains positive. With a majority of prebuilt housing stocks and its policy to reduce new development, the company’s working capital need is low. LALIN’s capital structure continues to be strong. As of March 2007, its debt-to-capitalization ratio remained healthy at 20.7%. Excluding Bt800 million in debentures due in 2007 (LALI077A, LALI078A), its borrowings were worth Bt78 million. Its cash on hand of Bt370 million, unused credit facilities of around Bt600 million as of March 2007 and a healthy balance sheet should enable the company to refinance the debentures as scheduled.
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
Lalin Property PLC (LALIN)
Issue Ratings:
LALI077A: Bt400 million senior debentures due 2007 Affirmed at BBB+
LALI078A: Bt400 million senior debentures due 2007 Affirmed at BBB+
Rating Outlook: Negative ----------------------------------------------------------
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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 “negative” outlook reflects the additional pressure on already-deteriorating performance of the company due to the slowdown in SDH market. The outlook may be revised to “stable” if LALIN could be able to improve its performance back to normalized level, while further deterioration in its performance could lead to a downgrade.
TRIS Rating reported that LALIN is a medium-sized housing developer established in 1988 by Mr. Taveesak Watcharakkawongse and Mr. Chaiyan Chakarakul, who have consistently held two-thirds of the company’s shares. LALIN develops housing projects primarily in the Bangkok Metropolitan Area (BMA). Its main housing products are single detached houses (SDH), twin houses, and townhouses with an average price of Bt3 million per unit. The company’s competitive advantage stems from its ability to control construction and overhead costs, which enables the company to offer lower prices while achieving favorable profit margins.
TRIS Rating said that LALIN’s operating performance continued to deteriorate in 2007. Due to the slowdown in the SDH market, its sales continuously declined from Bt729 million in the fourth quarter of 2005 to Bt212 million in the first quarter of 2007. Its net profit during the first quarter of 2007 sharply dropped to Bt28 million, compared to Bt80 million in the prior quarter. Despite lower, LALIN’s cash flow from operation remains positive. With a majority of prebuilt housing stocks and its policy to reduce new development, the company’s working capital need is low. LALIN’s capital structure continues to be strong. As of March 2007, its debt-to-capitalization ratio remained healthy at 20.7%. Excluding Bt800 million in debentures due in 2007 (LALI077A, LALI078A), its borrowings were worth Bt78 million. Its cash on hand of Bt370 million, unused credit facilities of around Bt600 million as of March 2007 and a healthy balance sheet should enable the company to refinance the debentures as scheduled.
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
Lalin Property PLC (LALIN)
Issue Ratings:
LALI077A: Bt400 million senior debentures due 2007 Affirmed at BBB+
LALI078A: Bt400 million senior debentures due 2007 Affirmed at BBB+
Rating Outlook: Negative ----------------------------------------------------------
---------------------------------------
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.