Bangkok--18 Feb--TRIS Rating TRIS Rating Co., Ltd. has downgraded the company rating of Lalin Property PLC (LALIN) to “BBB” from “BBB+” with “stable” outlook. The downgrade reflects LALIN’s weak operating performance, resulting from the slowdown in demand for low-rise residential property and the company’s slow investment policy. The ratings also take into consideration LALIN’s track record in the housing market, its cost competitiveness, and its conservative balance sheet. The weak demand in residential property and consumer confidence remain rating concerns. The “stable” outlook reflects the expectation that LALIN will be able to weather the current down cycle of the low-rise residential property market with its defensive and conservative strategies. TRIS Rating reported that LALIN is a medium-sized housing developer. It was established in 1988 by Mr. Taveesak Watcharakkawongse and Mr. Chaiyan Chakarakul, who have consistently been the major shareholders. Since its inception, LALIN has focused on developing low-rise housing projects in the Bangkok Metropolitan Area (BMA) and offers housing units with an average price of Bt2.7 million per unit. During 2005-2007, its semi-detached houses (Semi-DH) constituted 52% of total sales followed by single detached houses (SDH) (38%), and townhouses (10%). LALIN’s competitive edge stems from its ability to control construction and overhead costs, which enables the company to enjoy favorable profit margins. After exhibiting a weak performance in 2006, the company’s operating performance further deteriorated in 2007. This was due to a continued weak demand in the low-rise residential market and the company failed to respond to changing consumer preferences. Its wait-and-see strategy and the policy to slow new project development have exaggeratedly resulted in low turnover. TRIS Rating said, LALIN’s housing sales for the first nine months of 2007 declined by 54% from the same period in 2006, whereas the newly completed and registered low-rise housing units built by developers in the BMA declined by 21% over the same period. Its cash flow from operations fell from a quarterly average of Bt191 million in 2005 and Bt125 million in 2006 to Bt49 million in 2007. The company’s financial position remains acceptable. Despite thin and declining housing sales, LALIN’s liquidity remains manageable. With its pre-built stock of Bt840 million as of September 2007, LALIN’s need for new land and project development is low. Its financial flexibility continued to be healthy with unused credit facility of Bt1,176 million and debt-to-capitalization ratio as low as 14% as of September 2007. Consumer confidence in Thailand’s economy along with global financial turbulence have softened housing demand. Though inflationary pressures and interest rates are easing, demand for residential property is expected to remain soft in 2008, said TRIS Rating. Lalin Property PLC (LALIN) Company Rating: Downgraded to BBB from BBB+ Rating Outlook: Stable