TRIS Rating Co., Ltd. has upgraded the ratings of Preuksa Real Estate PLC (PS) and its existing debentures to “A-” from “BBB+”. At the same time, TRIS rating has assigned the “A-” rating to PS’s proposed issue of up to Bt1,500 million in senior debentures. The rating outlook is “stable”. The upgrades reflect PS’s strengthening business profile and the ability to fund growth without weakening its financial position. The ratings also take into consideration PS’s leading position in the low-priced townhouse market and acceptable record in the middle low-income single detached houses (SDH), its opportunity to grow in condominium market, its ability to control construction costs, and healthy financial position. Declining consumer confidence resulting from rising oil prices and an uncertain political situation remains rating concerns.
The “stable” outlook reflects the expectation that PS will be able to maintain its leading position in the low-priced townhouse market. The expansion into the condominium market is expected to leverage its cost advantage and construction expertise.
TRIS Rating reported that PS is one of the leading residential developers in Thailand. The company was established in 1993 by Mr. Thongma Vijitpongpun and was listed on the Stock Exchange of Thailand (SET) in December 2005. As of March 2008, the Vijitpongpun family held a 77% stake in the company. PS’s residential projects consist of townhouses, SDHs, and condominiums with average prices of Bt1.38 million per unit. During the last three years, townhouse sales constituted 60% of total revenue while SDH sales accounted for 40%. PS’s competitive advantage stems from its ability to manage the whole construction process itself. With its own pre-cast factory and an in-house construction team, the company is able to control the construction period and construction costs efficiently and to produce low-cost residential units to compete with its competitors.
TRIS Rating said that although the overall residential property market has been weak since 2005, PS’s operation has continued to outperform the market. Its presales jumped by 91% to Bt13,646 million in 2007 from Bt7,000 million annually during 2005-2006. PS’s profitability remains satisfactory, having held operating profit margins at 20% since 2006 through the first three months of 2008. Despite PS’s aggressive business expansion, its balance sheet remains healthy with the debt to capitalization ratio of 12.19% as of March 2008. Its cash flow was strong as the funds from operations (FFO) to total debt ratio reached 155.80% in 2007 and 42.04% (non-annualized) in the first quarter of 2008.
Demand for residential property depends on the country’s overall economic prospects. In 2008, the Thai economy is expected to show modest gross domestic product (GDP) growth of 4.5%-5.5%. A newly-announced government stimulus package, which reduced both the special business tax for residential developers and the transfer fee for homebuyers and property developers, may help alleviate the slowdown in demand for residential property and boost consumer confidence, said TRIS Rating. -- End
Preuksa Real Estate PLC (PS)
Company Rating: Upgraded to A- from BBB+
Issue Ratings:
PS098A: Bt400 million senior debentures due 2009 Upgraded to A- from BBB+
PS108A: Bt600 million senior debentures due 2010 Upgraded to A- from BBB+
Up to Bt1,500 million senior debentures due within 2011 A-
Rating Outlook: Stable
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Copyright 2008, 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 PS will be able to maintain its leading position in the low-priced townhouse market. The expansion into the condominium market is expected to leverage its cost advantage and construction expertise.
TRIS Rating reported that PS is one of the leading residential developers in Thailand. The company was established in 1993 by Mr. Thongma Vijitpongpun and was listed on the Stock Exchange of Thailand (SET) in December 2005. As of March 2008, the Vijitpongpun family held a 77% stake in the company. PS’s residential projects consist of townhouses, SDHs, and condominiums with average prices of Bt1.38 million per unit. During the last three years, townhouse sales constituted 60% of total revenue while SDH sales accounted for 40%. PS’s competitive advantage stems from its ability to manage the whole construction process itself. With its own pre-cast factory and an in-house construction team, the company is able to control the construction period and construction costs efficiently and to produce low-cost residential units to compete with its competitors.
TRIS Rating said that although the overall residential property market has been weak since 2005, PS’s operation has continued to outperform the market. Its presales jumped by 91% to Bt13,646 million in 2007 from Bt7,000 million annually during 2005-2006. PS’s profitability remains satisfactory, having held operating profit margins at 20% since 2006 through the first three months of 2008. Despite PS’s aggressive business expansion, its balance sheet remains healthy with the debt to capitalization ratio of 12.19% as of March 2008. Its cash flow was strong as the funds from operations (FFO) to total debt ratio reached 155.80% in 2007 and 42.04% (non-annualized) in the first quarter of 2008.
Demand for residential property depends on the country’s overall economic prospects. In 2008, the Thai economy is expected to show modest gross domestic product (GDP) growth of 4.5%-5.5%. A newly-announced government stimulus package, which reduced both the special business tax for residential developers and the transfer fee for homebuyers and property developers, may help alleviate the slowdown in demand for residential property and boost consumer confidence, said TRIS Rating. -- End
Preuksa Real Estate PLC (PS)
Company Rating: Upgraded to A- from BBB+
Issue Ratings:
PS098A: Bt400 million senior debentures due 2009 Upgraded to A- from BBB+
PS108A: Bt600 million senior debentures due 2010 Upgraded to A- from BBB+
Up to Bt1,500 million senior debentures due within 2011 A-
Rating Outlook: Stable
-------------------------------------------------------
Copyright 2008, 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.