Bangkok--22 Feb--Fitch Ratings Fitch Ratings (Thailand) Limited has today assigned a National Long-term rating of 'A+(tha)' to Siam Cement Public Company Limited's (SCC) new unsecured and unsubordinated debentures No.1/2008, amounting up to THB20 billion, due 2012. The new debentures will be used to refinance the company's maturing debentures, as well as to invest in its planned new projects. The rating is based on SCC's good revenue diversification, its leading position, extensive distribution channels and strong brand recognition in the domestic market. The rating also reflects the group's relatively strong cash flow generation and good track record of senior management. SCC's debt serviceability and financial flexibility are further supported by its strong access to the local debt capital market. Nonetheless, the rating takes into account continued margin pressure in light of rising raw material and energy costs, as well as from the impact of large excess supply and competitive operating environments in all SCC's core businesses. Other key credit concerns include the effect of the Thai Baht appreciation against the US Dollar on SCC's export revenue and the execution risks of new investments. In 2007, SCC's net sales increased by 3.7% yoy, thanks to strong petrochemicals prices, while its EBITDA (pre-dividend income) declined by 16% yoy to THB38.7bn, given margin pressures due to rising energy costs in its cement and paper businesses and also the impact of currency appreciation. SCC's EBITDA margins declined to 15% in 2007 from 18% in 2006. Including dividends from associates, SCC's EBITDA declined by 15% yoy to THB47.3bn in 2007. With less favorable EBITDA performance, SCC's net debt to EBITDA (including dividends from associates) weakened to 2.2x at end-2007 from 1.9x from end-2006. The 2008 earnings outlook will likely remain constrained, given the expected pressure on petrochemicals prices, still rising energy costs in cement and paper divisions and further currency appreciation. In light of its large investment plans and weakening earnings prospect, SCC's financial leverage is likely to weaken to the range of 3.0x during 2008-2009, although the company should be able to maintain its net debt to EBITDA in line with long-term leverage target of 2.5x thereafter. SCC has committed about THB90bn for its investment plans during 2008-2010, mainly towards its second naphtha cracker and downstream projects in Thailand (accounting for 76% of total planned capital expenditures), a new investment in Vietnam's packaging paper plant, a printing and writing paper capacity expansion in Thailand and waste heat generator projects which are related to efficiency improvement programmes for the cement division. Also, SCC is still reviewing new potential investments, including a petrochemical complex in Vietnam, a cement plant in Indonesia and other box plant acquisitions in the region.