TRIS Rating affirms the company rating on Thai Beverage PLC (ThaiBev) and the ratings on ThaiBev?s outstanding senior unsecured debentures at ?AA?, with a ?stable? rating outlook. At the same time, TRIS Rating assigns the rating of ?AA? to ThaiBev?s proposed issue of up to THB10 billion senior unsecured debentures. The proceeds from the new debentures will be used for debt refinancing.
The ratings reflect ThaiBev?s dominant position in the regional beverage markets, supported by its strong brands and extensive distribution network, as well as resilient cash generation. The ratings also take into consideration the company?s strong commitment to deleveraging. However, the ratings are constrained by an intensely competitive environment, regulatory constraints, and frequent excise tax hikes in the Thai alcoholic beverage industry.
ThaiBev performed in line with our expectations. In the first half of fiscal year (FY) 2023, its total revenue increased by 3.9% to THB149 billion thanks to the recovery of economic activities in both Thailand and Vietnam after the pandemic subsided. However, the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) declined by 3.1% to THB26.8 billion in the first half of FY2023, due to higher costs and increased marketing expenses. ThaiBev?s EBITDA margin slightly declined to 18.0% in the first half of FY2023, from 18.5% in FY2022. Meanwhile, the adjusted net debt to EBITDA ratio remained around 3.3 times from FY2022 to the first half of FY2023.
As of March 2023, ThaiBev?s total interest-bearing debt of THB204 billion included priority debt of THB26 billion. The priority debt comprised unsecured debts at subsidiary level. The company?s priority debt to total debt ratio was 13%.
RATING OUTLOOK
The ?stable? outlook reflects our expectation that ThaiBev will continue to deliver satisfactory operating performance and improving financial leverage. We expect the company to maintain its dominant position in the domestic and regional beverage markets.
RATING SENSITIVITIES
The ratings and/or outlook on ThaiBev could be revised upward, should the adjusted debt to EBITDA ratio fall below 2 times on a sustained basis. On the contrary, the ratings and/or outlook could be revised downward if ThaiBev?s financial profile is materially weaker than our projection with its net debt to EBITDA ratio staying above 3.5 times for a prolonged period.
RELATED CRITERIA
- Corporate Rating Methodology, 15 July 2022
- Key Financial Ratios and Adjustments for Corporate Issuers, 11 January 2022
- Issue Rating Criteria, 15 June 2021
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Thai Beverage PLC (ThaiBev)
Company Rating: AA
Issue Ratings:
TBEV243A: THB11,300 million senior unsecured debentures due 2024 AA
TBEV244A: THB8,000 million senior unsecured debentures due 2024 AA
TBEV253A: THB9,300 million senior unsecured debentures due 2025 AA
TBEV25NA: THB3,395 million senior unsecured debentures due 2025 AA
TBEV279A: THB9,262 million senior unsecured debentures due 2027 AA
TBEV27NA: THB5,478 million senior unsecured debentures due 2027 AA
TBEV283A: THB14,500 million senior unsecured debentures due 2028 AA
TBEV293A: THB10,100 million senior unsecured debentures due 2029 AA
TBEV29NA: THB2,500 million senior unsecured debentures due 2029 AA
TBEV32NA: THB1,662 million senior unsecured debentures due 2032 AA
Up to THB10,000 million senior unsecured debentures due within 10 years AA
Rating Outlook: Stable