Bangkok--2 Sep--TRIS Rating TRIS Rating Co., Ltd. has assigned the rating of “A-” to the proposed issue of up to Bt3,000 million in senior debentures of Hemaraj Land and Development PLC (Hemaraj). At the same time, TRIS Rating has affirmed the company rating of Hemaraj at “A-” with “stable” outlook. The ratings reflect Hemaraj’s successful record of industrial land sales, the increasing contribution from utilities and service income, and a healthy balance sheet. The ratings also take 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 leverage level will increase in 2009-2011 following the IPP project investment, 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 April 2008, the Horrungruang family held 15.1% of the shares, followed by Credit Agricole (Suisse) SA, Singapore Branch (9.3%), and Thai NVDR Co., Ltd. (7.6%). Hemaraj owns and operates 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 11,354 rai as of June 2008. The remaining salable area of approximately 6,000 rai in Hemaraj Eastern Seaboard Industrial Estate (H-ESIE) is sufficient for development over the next 3-5 years. For the first half of 2008, Hemaraj sold 934 rai of land, 55% higher than the same period of 2007, while industry-wide land sales increased 30% from the same period of 2007. The company’s first condominium development project, The Park, was 83% sold and 99% completed as of June 2008. All unit transfers are planned to be completed by 2008. Revenue from land sales during the first half of 2008 was Bt1,474 million. Funds from operations for the first half of 2008 improved to Bt1,351 million, from an average level of Bt500-Bt600 million during 2005-2007, due mainly to the transfer of condominium units. Utilities and other service income of Bt800-Bt1,000 million per year provides more reliable cash flow and enables the company to withstand the fluctuations in industrial land sales. TRIS Rating said, Hemaraj has also diversified into power generation business. Gheco-One Co., Ltd., a 65:35 joint venture company between the Glow Group and Hemaraj, won the independent power producer (IPP) bidding to develop a 660 megawatt (MW) coal-fired power project, with a total cost of approximately US$1,150 million. Due to the need of Bt3,500-Bt4,000 million as an equity investment in this project, Hemaraj’s leverage will slightly increase to 35%-40% from the healthy debt-to-capitalization ratio of 33.8% as of June 2008. Despite the current slowdown in the Thai economy and an unstable political situation, prospects for the overall industrial property sector in the medium to long term remain good. Foreign investment and international trade promotion policies, together with Thailand’s desirable geographic location, continue to attract foreign investors, said TRIS Rating. Hemaraj Land and Devleopment PLC (Hemaraj) Company Rating: Affirmed at A- Issue Rating: Up to Bt3,000 million senior debentures due within 2013 A- Rating Outlook: Stable For more information please contact: TRIS Rating Co., Ltd. (TRIS Rating) Tel: 66 (0) 2231-3011 Ext. 500, Fax: 66 (0) 2231-3012 E-mail: [email protected]