BANGKOK--NOV 22--TRIS
THAI RATING AND INFORMATION SERVICES (TRIS) REVIEWED 22 NOVEMBER
1996 RATINGS FOR PROPERTY PERFECT PLC'S (PERFEC) DEBENTURES. TRIS
DOWNGRADED PERFEC'S 1,800 AND 1,500 MILLION BAHT DEBENTURES TO "BB+" FROM
"BBB." THE LOWERED RATINGS INDICATE INCREASING BUSINESS RISKS FOLLOWING
THAILAND'S DEPRESSED PROPERTY INDUSTRY. THE RATINGS ALSO REFLECT
PERFEC'S CURRENTLY WEAK FINANCIAL PROFILE STEMMING FROM HIGH LEVERAGE AND
PAST RAPID BUSINESS EXPANSION. ITS OVERALL BUSINESS POSITION DEPENDS
ESSENTIALLY ON TO ITS ABILITY TO DELIVER COMPLETED UNITS AMIDST THE
DIFFICULT PROPERTY MARKET SITUATION. HOWEVER, THE RATINGS ARE SOMEWHAT
OFFSET BY THE COMPANY'S OVERALL GOOD ASSET QUALITY, SOLID MARKET POSITION
AND MANAGERIAL SKILL IN LOW-RISE RESIDENTIAL DEVELOPMENT.
PERFEC DEVELOPS DETACHED HOUSE AND TOWNHOUSE PROJECTS LOCATED ON
THE OUTSKIRTS OF BANGKOK. HOUSES ARE OF GOOD QUALITY, WELL-DESIGNED AND
ACCREDITED BY CUSTOMERS. LAND BANK AND PROJECT SITES ARE IN EMERGING
COMMUNITY AREAS WITH HIGH MARKET PROSPECTS. ITS MANAGEMENT IS PRAGMATIC
AND HAS EXTENSIVE EXPERIENCE IN DEVELOPING HOUSING PROJECTS. PERFEC'S
INTERNAL FINANCING HAS BEEN INADEQUATE AND ITS INCREASING BACKLOGS HAVE
PUT MORE PRESSURE ON CASH FLOW. THE COMPANY HAS MAINLY DEPENDED ON DEBT-
FINANCING WITH A HEAVY INTEREST BURDEN.
IN JUNE 1996, PERFEC'S OUTSTANDING DEBTS ESCALATED TO ABOUT
10,800 MILLION BAHT. ITS GEARING RATIO, BASED ON CASH FLOW BASIS, HAS
REMAINED HIGH WITH TOTAL DEBTS TO CAPITALIZATION OF 68.5% INTEREST
COVERAGE WAS AT 0.5 TIMES. PERFEC IS EXPOSED TO FOREIGN CURRENCY RISK.
ITS FOUR ISSUANCES OF DEBT SECURITIES TOTALING TO 5,175 MILLION BAHT WERE
FLOATED IN BOTH DOMESTIC AND INTERNATIONAL MARKETS. PROCEEDS WERE USED TO
REPAY COSTLY SHORT-TERM BAHT BORROWINGS AND INVEST IN ITS OPERATIONS.
LAST YEAR, ITS INTEREST COVERAGE WAS AT THE INSUFFICIENT LEVEL OF 0.6
TIMES. PRETAX RETURN ON PERMANENT CAPITAL WAS AT 5.8%. FUNDS FROM
OPERATIONS COVERED ONLY 5.2% OF TOTAL DEBTS. AS OF AUGUST 1996, ITS
BACKLOGS HAD ACCUMULATED TO 3,029 UNITS, VALUED AT APPROXIMATELY 7,900
MILLION BAHT. HOWEVER, THE EXPECTED DELIVERY OF ITS COMPLETED UNITS IN
1996, WORTH ABOUT 2,800 MILLION BAHT, WILL HELP IMPROVE PERFEC'S
FINANCIAL POSITION. PERFEC IS FULLY AWARE OF CURRENT MARKET DIFFICULTIES
AND THE CRITICAL ISSUES CONCERNING ITS DISTRESSED CASH FLOW. TO HELP
STRENGTHEN ITS CASH FLOW, PERFEC IS MINIMIZING LAND BANK ACQUISITION,
EXPEDITING SALES OF LAND PLOTS AND TARGETING DETACHED HOUSE DEVELOPMENT.
THE COMPANY HAS SOME FINANCIAL FLEXIBILITY DUE TO ACCESS TO THE FINANCIAL
MARKET AND UNDRAWN CREDIT FACILITIES WORTH ABOUT 2,743 MILLION BAHT IN
AUGUST 1996. END.
NOTE: PROPERTY PERFECT PLC (PERFEC) TRIS'S RATING
PERFEC#1: 1,800 MB SR DEBS DUE 1999 DOWNGRADED TO "BB+" FROM "BBB"
PERFEC#2: 1,500 MB SR DEBS DUE 1998 DOWNGRADED TO "BB+" FROM "BBB"
THAI RATING AND INFORMATION SERVICES (TRIS) REVIEWED 22 NOVEMBER
1996 RATINGS FOR PROPERTY PERFECT PLC'S (PERFEC) DEBENTURES. TRIS
DOWNGRADED PERFEC'S 1,800 AND 1,500 MILLION BAHT DEBENTURES TO "BB+" FROM
"BBB." THE LOWERED RATINGS INDICATE INCREASING BUSINESS RISKS FOLLOWING
THAILAND'S DEPRESSED PROPERTY INDUSTRY. THE RATINGS ALSO REFLECT
PERFEC'S CURRENTLY WEAK FINANCIAL PROFILE STEMMING FROM HIGH LEVERAGE AND
PAST RAPID BUSINESS EXPANSION. ITS OVERALL BUSINESS POSITION DEPENDS
ESSENTIALLY ON TO ITS ABILITY TO DELIVER COMPLETED UNITS AMIDST THE
DIFFICULT PROPERTY MARKET SITUATION. HOWEVER, THE RATINGS ARE SOMEWHAT
OFFSET BY THE COMPANY'S OVERALL GOOD ASSET QUALITY, SOLID MARKET POSITION
AND MANAGERIAL SKILL IN LOW-RISE RESIDENTIAL DEVELOPMENT.
PERFEC DEVELOPS DETACHED HOUSE AND TOWNHOUSE PROJECTS LOCATED ON
THE OUTSKIRTS OF BANGKOK. HOUSES ARE OF GOOD QUALITY, WELL-DESIGNED AND
ACCREDITED BY CUSTOMERS. LAND BANK AND PROJECT SITES ARE IN EMERGING
COMMUNITY AREAS WITH HIGH MARKET PROSPECTS. ITS MANAGEMENT IS PRAGMATIC
AND HAS EXTENSIVE EXPERIENCE IN DEVELOPING HOUSING PROJECTS. PERFEC'S
INTERNAL FINANCING HAS BEEN INADEQUATE AND ITS INCREASING BACKLOGS HAVE
PUT MORE PRESSURE ON CASH FLOW. THE COMPANY HAS MAINLY DEPENDED ON DEBT-
FINANCING WITH A HEAVY INTEREST BURDEN.
IN JUNE 1996, PERFEC'S OUTSTANDING DEBTS ESCALATED TO ABOUT
10,800 MILLION BAHT. ITS GEARING RATIO, BASED ON CASH FLOW BASIS, HAS
REMAINED HIGH WITH TOTAL DEBTS TO CAPITALIZATION OF 68.5% INTEREST
COVERAGE WAS AT 0.5 TIMES. PERFEC IS EXPOSED TO FOREIGN CURRENCY RISK.
ITS FOUR ISSUANCES OF DEBT SECURITIES TOTALING TO 5,175 MILLION BAHT WERE
FLOATED IN BOTH DOMESTIC AND INTERNATIONAL MARKETS. PROCEEDS WERE USED TO
REPAY COSTLY SHORT-TERM BAHT BORROWINGS AND INVEST IN ITS OPERATIONS.
LAST YEAR, ITS INTEREST COVERAGE WAS AT THE INSUFFICIENT LEVEL OF 0.6
TIMES. PRETAX RETURN ON PERMANENT CAPITAL WAS AT 5.8%. FUNDS FROM
OPERATIONS COVERED ONLY 5.2% OF TOTAL DEBTS. AS OF AUGUST 1996, ITS
BACKLOGS HAD ACCUMULATED TO 3,029 UNITS, VALUED AT APPROXIMATELY 7,900
MILLION BAHT. HOWEVER, THE EXPECTED DELIVERY OF ITS COMPLETED UNITS IN
1996, WORTH ABOUT 2,800 MILLION BAHT, WILL HELP IMPROVE PERFEC'S
FINANCIAL POSITION. PERFEC IS FULLY AWARE OF CURRENT MARKET DIFFICULTIES
AND THE CRITICAL ISSUES CONCERNING ITS DISTRESSED CASH FLOW. TO HELP
STRENGTHEN ITS CASH FLOW, PERFEC IS MINIMIZING LAND BANK ACQUISITION,
EXPEDITING SALES OF LAND PLOTS AND TARGETING DETACHED HOUSE DEVELOPMENT.
THE COMPANY HAS SOME FINANCIAL FLEXIBILITY DUE TO ACCESS TO THE FINANCIAL
MARKET AND UNDRAWN CREDIT FACILITIES WORTH ABOUT 2,743 MILLION BAHT IN
AUGUST 1996. END.
NOTE: PROPERTY PERFECT PLC (PERFEC) TRIS'S RATING
PERFEC#1: 1,800 MB SR DEBS DUE 1999 DOWNGRADED TO "BB+" FROM "BBB"
PERFEC#2: 1,500 MB SR DEBS DUE 1998 DOWNGRADED TO "BB+" FROM "BBB"