Bangkok--Nov 25--Fitch Ratings Thailand
Fitch Ratings (Thailand) Limited has today assigned Asian Property Development Public Company Limited’s (“APD”) THB100 million Senior Unsecured debentures No.2/2004 due 2006 a National Senior Unsecured rating of ‘BBB(tha)’. The proceeds from the new debentures will be used to refinance APD’s project loans. At the same time, the agency has affirmed APD’s National Long-term and Short-term ratings at ‘BBB(tha)’ and ‘F3(tha)’, and the outstanding debentures totalling THB2.5 billion and bills of exchange No. 11-22/2004 and No. 25-36/2004 totalling THB400m, National Long-term ratings at ‘BBB(tha)’. The Outlook is Positive.
The ratings reflect APD’s strong niche position in the inner-city townhouse development market in Bangkok as well as its solid operating performance and relatively low, but increasing, financial leverage. APD also enjoys relatively lower-risk, higher-margin and faster turnover from its townhouse developments, compared with single detached house (“SDH”) and condominium developers. The ratings also reflect the expected increase in residential and housing demand, helped by Thailand’s economic recovery, although interest rates are likely to increase over the medium term.
APD reported net sales of THB3.4bn in 9M04, up 29% yoy, largely driven by the new projects launched in H203/H104 and partly fuelled by the consolidation of Pre-built Company Limited (“Pre-built”) into APD. APD’s overall EBITDA increased to THB935m (up 17% yoy), although its EBITDA margin declined to 27% in 9M04 from 30% in 9M03 At end-9M04, APD’s net debt to last-twelve-months EBITDA ratio weakened to 2.3x from 1.0x at end-2003, while its EBITDA to interest (plus capitalised interest) ratio lowered to 10.5x in 9M04 (2003; 17.4x). At end-9M04, APD’s total debt increased to THB4.4bn from THB2.5bn at end-2003. Of its debt portfolio, 85% was long-term and 15% short-term at end-9M04. APD’s unsecured debt portion continued to improve to 85% of its debt portfolio at end-9M04 (at end-2003; 70%), with average debt maturity of three years. At end-9M04, APD had undrawn committed banking facilities of THB6.0bn, helping to provide funding flexibility.
Nonetheless, the cyclical nature of the residential development business that forms APD’s core business is still a concern. The principal risks include unmatched timing of operating cash flows due to the non-recurring nature of projects, rising interest rates, slower inventory turnover due to intensified competition, falling home and rental prices, construction delays as well as rising raw construction material and land costs. In addition, the rising working capital required for the large project expansion, as well as increasing dividend payments, are likely to increase APD’s net debt for 2004, though strong EBITDA growth should result in net debt to EBITDA remaining relatively moderate.
A full rating report on Asian Property Development Plc. is available on the agency’s website, www.fitchratings.com.
CONTACT: Wasant Polcharoen, Bangkok, Tel: +662 655 4763, Lertchai Kochareonrattanakul +662 655 4760, Vincent Milton +662 655 4759.
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with sub- or low-investment grade international sovereign ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. End.