TRIS Rating Co., Ltd. has assigned the company rating of M.K. Real Estate Development PLC (MK) at “BBB” with “stable” outlook. The rating reflects MK’s long track record in the middle- to low-income residential property market, its cost competitiveness, and acceptable balance sheet. The rating also takes into consideration the slowdown in demand for low-rise residential property and the cyclical nature of the property development industry. The “stable” outlook reflects the expectation that MK will be able to maintain its position in the low-rise residential property market with a healthy balance sheet and cost competitiveness. TRIS Rating reported that MK is a medium-sized property developer. It was established in 1973 by Mr. Chuan Tangmatitham and was listed on the Stock Exchange of Thailand (SET) in 1990. The Tangmatitham family has been the major shareholder since its inception, with a 28% stake as of April 2007. MK has focused on developing low-rise residential projects with an average price of Bt3.4 million per unit. Single detached houses (SDH) have contributed more than 60% of MK’s total presales during 2003-2007. The presales of the company’s duplex units had remained very small until 2006 and grew to be 33% of total presales in 2007. MK’s competitive edge stems from its ability to manage construction costs and achieve favorable profit margins. TRIS Rating said that MK’s operating performance of 2007 was satisfactory. Although demand in the low-rise residential property market continued to be slow, MK’s total revenues of 2007 grew 3% to Bt1,986 million. However, its cash flow from operations fell from a quarterly average of Bt179 million and Bt79 million in 2005 and 2006 to Bt39 million in 2007 as the company sacrificed its margin in 2007 in order to boost sales performance during the low-rise residential property market downturn. MK’s financial position is moderate. Despite decreasing profitability, the company’s gross profit margin of 38% in 2007 was higher than margins of 30%-35% recorded by most developers. With the total debt to capitalization ratio of 27.39% and an unused credit facility of Bt1,392 million as of December 2007, MK’s financial flexibility remains healthy. Demand for residential property depends on overall economic prospects. The Thai economy will show modest growth as gross domestic product (GDP) is expected to rise by 4.5%-5.5% in 2008. A newly-announced stimulus package, including tax cut for both homebuyers and property developers, should help alleviate the slowdown in demand for residential property and boost consumer confidence, said TRIS Rating. -- End M.K. Real Estate Development PLC (MK) Company Rating: BBB Rating Outlook: Stable -------------------------------------------------------Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.