Bangkok--5 Jul--TRIS Rating
Current slowdown in the residential property is expected to continue until next year, according to TRIS Rating Co., Ltd.’s comment
in its newly released industry report on the residential property development sector. Political situation and consumer confidence may
improve after the general election, which is expected to be held by the end of 2007 or early 2008. However, a quick recovery for the housing
market seems unlikely. TRIS Rating noted that among the residential development markets, single-detached houses have been hit hard by
slowing residential demand. On the other hand, condominium market has grown dramatically since 2005 due to the urbanization trends, more
convenient mass transportation, rising oil prices, and speculative purchases.
According to TRIS Rating’s report, most companies under its watch have reported lower sales and margins since the first half of
2006 due to falling residential demand and rising operating costs. Companies focusing on volumes in stead of margins will have negative
impacts on their profitability in the near term. Developers with completed housing stocks will require lower working capital, while those
who employ growth strategy during a slow market demand will face challenges in liquidity management.
Nevertheless, TRIS Rating believes there is no material deterioration in the credit qualities of all the 9 rated developers in its
portfolio as their balance sheets remain healthy with a majority having debt-to-equity ratios at less than one times. Therefore, TRIS Rating
affirms the ratings of all companies in the sector. However, TRIS Rating changes the rating outlooks of two companies to “negative” from
“stable”, while the rest remain unchanged.
The details of credit ratings and rating outlooks of TRIS Rating’s 9 property companies are as follows:
Company Credit Rating Rating Outlook
- - Old New
Land and Houses PLC (LH) A (company+senior debentures) Stable Negative
Asian Property Development PLC (AP) BBB+ (company+senior debentures) Stable Stable
Lalin Property PLC (LALIN) BBB+ (senior debentures) Stable Negative
Noble Development PLC (NOBLE) BBB+ (company) Stable Stable
Preuksa Real Estate PLC (PS) BBB+ (company) Positive Positive
Quality Houses PLC (QH) BBB+ (company+senior debentures) Stable Stable
Supalai PLC (SPALI) BBB+ (company) Stable Stable
Sansiri PLC (SIRI) BBB (company) Stable Stable
Golden Land Property Development PLC (GOLD) BBB (secured debentures) Stable Stable