Bangkok--16 Jan--Moody's
Moody's Investors Service has assigned a Baa2 local currency issuer rating to Thai Beverage Public Company Limited (ThaiBev). This is the first time Moody's has assigned ratings to ThaiBev. The outlook for the rating is stable.
"The Baa2 issuer rating reflects ThaiBev's strong position as Thailand's leading provider of beer and spirits, including its strong brand recognition as well as distribution and production capabilities, combined with a conservative financial profile sustained by healthy profitability," says Moody's Charles Macgregor, a VP/Senior Credit Officer and lead analyst for the company.
"The rating also reflects recent pressures on the company's share of the beer market and its volumes, along with regulatory uncertainty; ThaiBev's relatively short track record as a publicly listed company; and potential risks associated with prospective international expansion," Moody's Macgregor adds.
In accordance with Moody's Global Alcoholic Beverage Methodology, ThaiBev's rating maps to a Baa1, one notch above the actual rating. The difference is driven by the company's strong financial profile. However, Moody's also places an emphasis on revenue volatility, scale, and diversification in arriving at its Baa2 issuer rating. Regulatory risk, a factor not captured in the methodology outcome, is a further consideration.
The rating outlook is stable, given the fundamental strength of ThaiBev's operating and financial profile. Moody's expects it will target a debt to EBITDA ratio of less than 1.5x on a long-term basis, albeit slight breaches may occur from time to time, should the company debt-fund acquisitions.
The rating may experience upward pressure should ThaiBev experience greater stability and diversity within the domestic market, while successfully executing its international expansion plan and sustaining a sound financial profile. Such an outcome could be evidenced by net revenue, excluding excise tax, approaching $2 billion, while EBITA margins are maintained above 30%. The establishment of a track record as a listed public company with ongoing sound corporate governance would also be helpful in supporting upward rating pressure.
On the other hand, the rating may experience downward pressure should ThaiBev experience significant market share loss in either the beer or spirits segment, such that its EBITA margin falls below 25%, FFO to debt falls below 30% and debt to EBITDA exceeds 2.7x.
Thai Beverage Public Company Limited, headquartered in Bangkok, is the leading producer of beer and spirits in Thailand.
Sydney
Charles F. Macgregor
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Pty Ltd
JOURNALISTS: (612) 9270-8102
SUBSCRIBERS: (612) 9270-8100
Singapore
Alan Greene
Senior Vice President
Corporate Finance Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308