Bangkok--26 Jul--TRIS Rating TRIS Rating Co., Ltd. has affirmed the company rating of Supalai PLC (SPALI) at “BBB+”. At the same time, TRIS Rating has assigned “A-” rating for SPALI’s proposed up to Bt1,000 million senior secured debentures. The out look of the company has been assigned “stable”. The ratings reflect SPALI’s ability to control operating costs, its long track record in the residential development market, and an accepted brand name in the single detached house (SDH) and condominium markets. The ratings also take into consideration the cyclical downturn in the property development market and slowing demand for residential property due to the uncertain political situation and declining consumer confidence. The issue rating also takes into consideration the value of Supalai Grand Office Tower, which is pledged as collateral throughout the life of the debentures. The land and building are valued at 1.7 times SPALI’s proposed debentures. The “stable” outlook reflects the expectation that SPALI will be able to complete the construction of its condominiums as planned. With efficient cost control and a healthy balance sheet, SPALI should be able to weather the downturn in the residential market. The company is expected to maintain its conservative financial policy and keep the debt to capitalization ratio at less than 50% in the medium term. TRIS Rating reported that SPALI was established in 1989 and is one of Thailand’s leading property developers. The company has developed SDH, townhouse, and condominium projects, both in the Bangkok metropolitan area (BMA) and upcountry. Its products focus on the middle-income market with prices ranging between Bt1-Bt10 million per unit. SPALI’s competitive edge stems from its ability to control operating costs and offer housing units at competitive prices in various locations. In the first three month of 2007, SPALI’s operating performance remained satisfactory, with revenue increasing to Bt1,469 million from Bt1,292 million in the same period of 2006. Its profitability remained favorable, even though its operating profit margins declined to 26% in the first three months of 2007, compared with an average of 30% during the last four years. During the first three months of 2007, the company’s pre-tax returns on permanent capital also declined to 19% (annualized) from 25% in 2006. SPALI has been able to keep its financial leverage at an acceptable level, despite significant growth of its project portfolio over the past few years. Its debt to capitalization ratio continued to improve to 30% as of March 2007, from 33% by the end of 2006. Political uncertainty has deteriorated consumer confidence and softened the housing market. Though inflationary pressures and interest rates are easing, TRIS Rating sees that demand for residential property is expected to remain soft in 2007-2008.