Bangkok--4 May--TRIS Rating
TRIS Rating Co., Ltd. has affirmed the company rating of Banpu PLC (BANPU) and the ratings of its senior debentures at “A+” with “stable” outlook. The ratings reflect BANPU’s proven record as a regional coal producer, diversified base of coal reserves, and strong financial profile. The ratings also take into consideration the company’s greater exposure in international markets as well as the political instability and uncertain investment climate in Indonesia. BANPU’s diversification into the power generation business should provide reliable sources of income to withstand the fluctuations in coal price cycles.
The “stable” outlook for BANPU reflects TRIS Rating’s expectations that the company will maintain its strong financial position to accommodate higher business risk and heavy forthcoming capital expenditures.
TRIS Rating reported that BANPU continues to maintain its leading position in the Thai coal market while strategically expanding its coal business into other Asian countries. More than 20 years of industry experience enables the company to successfully expand its coal operations in Indonesia. Currently, BANPU ranks among the top five coal producers in Indonesia. Having a variety of coal sources and different grades of coal quality strengthens the company’s competitive advantages in international markets. The company also diversified into China by acquiring a 12.5% stake in the Daning mine and a 40% stake in the Hebi Zhong Tai mine, two underground coal projects in China. As of December 2006, the company had total coal reserves of 349.4 million tonnes (100% basis), a decrease of 4% from 2005, partly due to an increase in coal production. BANPU’s coal production surged to 21.8 million tonnes in 2006 with Indonesian mines accounting for roughly 89% of total production. For 2006, the company’s sales were Bt33,378 million, a 32% increase from 2005. Coal sales accounted for 91% of total revenue, with the balance from the power business. Gross margin decreased to 37.6% from 44.7% in 2005 due to increasing oil prices and mining costs.
TRIS Rating said, besides the coal business, BANU has investments in the power business worth approximately Bt15,000 million as of December 2006. The power business consists of a 50% holding in BLCP Power Ltd. (BLCP), a 14.99% holding in Ratchaburi Electricity Generating Holding PLC (RATCH) and 70%-100% ownership of three power plants in China. The company received Bt435 million in dividends from RATCH in 2006 while BLCP recorded a Bt769 million net profit in its first year of operation and China power business contributed Bt536 million net profit.
Banpu PLC (BANPU)
Company Rating: Affirmed at A+
Issue Ratings:
BP082A: Bt3,000 million senior debentures due 2008 Affirmed at A+
BP084A: Bt500 million senior debentures due 2008
BP093A: Bt500 million senior debentures due 2009 Affirmed at A+
BP109A: Bt2,000 million senior debentures due 2010 Affirmed at A+
BP10NA: Bt1,500 million senior debentures due 2010 Affirmed at A+
BP10NB: Bt1,000 million senior debentures due 2010 Affirmed at A+
BP111A: Bt1,500 million senior debentures due 2011 Affirmed at A+
BP15NA: Bt2,500 million senior debentures due 2015 Affirmed at A+
Rating Outlook: Stable