TRIS Rating Co., Ltd. has upgraded the company rating of Hemaraj Land and Development PLC (Hemaraj) to “A-” from “BBB+” with “stable” outlook. The upgrade is based upon the company’s successful record of industrial land sales, its increasing contributions from utilities and service income, and a healthy balance sheet. The rating also takes into consideration the volatile nature of the industrial property market. The “stable” outlook reflects the expectation that Hemaraj will be able to maintain land sales and service income from industrial estate development. Though the IPP project investment will require approximately Bt4,000 million in new equity, the project will provide reliable income to the company in the medium term. TRIS Rating reported that Hemaraj is one of the leading industrial estate developers in Thailand. It was established in 1988 by the Horrungruang, Srisomburananonta and Anankusri families. As of September 2007, the Horrungruang family held 14.6% of the shares, followed by Credit Agricole (Suisse) SA, Singapore Branch (9.4%), and Thai NVDR Co., Ltd. (7.4%). Hemaraj owns and operates a total of six industrial estates located in Rayong, Chonburi, and Saraburi provinces. During 2005-2007, the company’s land sales averaged 897 rai per year, with cumulative land sales of 10,149 rai as of December 2007. The remaining salable area of approximately 6,500 rai in Hemaraj Eastern Seaboard Industrial Estate (H-ESIE) is sufficient for auto-related customers in the next 3-5 years. TRIS Rating said, Hemaraj’s industrial land sales have continued to lead the industry. For the first nine months of 2007, the company sold 848 rai of land, almost three times the amount sold in the same period of 2006. In comparison, the industry-wide land sales were 2,611 rai, a 40% increase from the same period in 2006. Revenue from land sales during the first nine months of 2007 was Bt1,226 million. Utilities and other service incomes of Bt800-Bt1,000 million per year provide more reliable cash flow and enable the company to withstand the fluctuations of industrial land sales. Hemaraj’s diversification into residential property development was moderately satisfactory since the project has a good location on Chidlom road. “The Park”, Hemaraj’s first condominium project, was 81% sold and 92% complete as of September 2007. The company started transferring the units to customers in November 2007. All transfers are planned to be completed by 2008. Hemaraj has also diversified into power generation. Gheco-One Co., Ltd., a 65:35 joint venture company between Glow Group and Hemaraj, won the independent power producer (IPP) bidding to develop a 660 megawatts (MW) coal-fired power project, with a total cost of approximately Bt40,000 million. The plant is scheduled to commence operation by 2012. Hemaraj’s total debt increased to Bt4,575 million as of September 2007 during the construction of the condominium project. However, the debt to capitalization ratio remained healthy at 37.8% in September 2007. Funds from operations is expected to improve significantly after the condominium units are transferred to clients in 2008. TRIS Rating said, the general election in December 2007 has alleviated political uncertainty. The new government is expected to restore the investor confidence. In the medium to long term, prospects for the overall industrial property sector remain good. Foreign investment and international trade promotion policies, together with Thailand’s desirable geographic location, continue to attract foreign investors. -- End Hemaraj Land and Development PLC (Hemaraj)Company Rating: Upgraded to A- from BBB+Rating Outlook: Stable-------------------------------------------------------Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. 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