Bangkok--14 Sep--Fitch Ratings (Thailand) Fitch Ratings (Thailand) Limited has today affirmed Asian Property Development Public Company Limited’s (APD) National Long-term rating at ‘BBB(tha)’with a Stable Outlook and National Short-term at ‘F3(tha)’. At the same time, the agency has affirmed APD’s National Long-term rating on its senior unsecured debentures No.1/2003, due 2009, outstanding at THB1.35 billion, at ‘BBB(tha)’. APD’s ratings are based on its strong brand recognition, as well as its expertise and solid market position in Bangkok’s inner-city townhouse and condominium development market. The ratings also reflect APD’s strong sales performance, evidenced by a strong sales backlog of THB13bn at end-June 2007, which to some degree would help mitigate concerns over an industry-wide slowdown. Nevertheless, APD is exposed to the cyclical nature of the residential development business. Weakening economic growth outlook, continued political uncertainty and high oil prices have undermined homebuyer confidence, which has resulted in a substantial slowdown in new housing demand in 2006 and 2007. In addition, intensified competition continues to put pressure on margins. Other operational risks include the non-recurring nature of APD’s project cash flows and increasing working capital requirement amid condominium project expansion. Partially mitigating these risks is APD’s focus on cash flow management, as well as its manageable debt and liquidity profile. In H107, APD’s EBITDA declined by 35% yoy to THB435 million due to a decline in sales and margins as a result of a continued industry-wide slowdown and intense competition. However, Fitch expects sales recognition of one condominium project worth THB2.5bn to be a key earnings driver for H207, which should help boost its annual sales and EBITDA by about 20% yoy for 2007. Although funds from operations were relatively strong, APD’s free cash flows (post dividend) remained weak in 2006 and H107 due to a high dividend payout and land acquisition. At end-H107, APD’s net debt stood at THB3.7bn which was equivalent to 4.3x of its last-12-month EBITDA (end-2006: 2.9x). Continued substantial cash outflows to fund new land acquisition and the construction of new high-rise projects will see its net debt remain high at about THB4.0bn up to 2009, although APD’s debt profile should remain manageable. Its short term debt is now about 30% of its debt portfolio, with the reminder 70% expected to mature over the next four years. APD’s liquidity is supported by a cash balance of THB914m and its remaining undrawn committed credit facilities of THB12bn at end-H107. The Stable Outlook reflects the likelihood that APD will be able to maintain its strong business profile and liquidity position consistent with the current credit metric. A sustainable large net debt reduction and sustained net debt to EBITDA ratio of below 2.0x could trigger a positive revision of the ratings, while a sustained substantially higher-than-expected net debt or much worse-than-expected industry prospects could result in a negative revision. Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such 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. CONTACTS: Wasant Polcharoen, Lertchai Kochareonrattanakul, Vincent Milton, Bangkok, +662 655 4755. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.