TRIS Rating Co., Ltd. has affirmed the company rating of United Farmer & Industry Co., Ltd. (UFIC) and the ratings of UFIC’s senior secured debentures at “BBB+” with “stable” outlook. As a sugar producer under the Mitr Phol Group, UFIC’s rating reflects the Mitr Phol Group’s leading position in the Thai sugar and sugarcane industry, its well-accepted brand name, and its efficient sugar mill operations. The ratings also take into consideration the highly leveraged balance sheets of both the company and the group, the fluctuations in sugarcane supply, and the volatility of sugar prices.
The “stable” outlook reflects TRIS Rating’s expectation that the Mitr Phol Group will continue to maintain its leading position in Thailand’s sugar business, and UFIC will continue to be the major domestic sugar producer within the group. Due to the recent increased volume of sugarcane and moderating sugar price, UFIC’s sugar business is expected to generate sales of approximately Bt6,000-Bt7,000 million and EBITDA of Bt1,200-Bt1,500 million per year during 2007-2008.
TRIS Rating reported that UFIC is the major sugar producer within the Mitr Phol Group, the leader in the Thai sugar and sugarcane industry. Of the five domestic sugar mills within the group, UFIC operates three sugar processing plants in the Northeastern Thailand, with the combined cane crushing capacity of 70,000 cane tonnes per day, representing approximately 60% of the total crushing capacity of the Mitr Phol Group in Thailand. During the last five years, the Mitr Phol Group has maintained the largest market share in sugarcane at 17%-18%. For the 2006/2007 production period, the Mitr Phol Group continues to be the largest sugar producer in Thailand with an 18.9% market share, followed by Thai Roong Ruang Group (18.1%), Thai Ekkalak Group (14.0%), and KSL Group (8.3%).
TRIS Rating said that UFIC’s sugar production in the 2006/2007 crushing period was approximately 784,000 tonnes, up by 43% from the previous year and better than the 38% average growth of the industry. Its crushing yield of 108.16 kilograms (kg.) per cane tonne was better than the industry average of 104.94 kg. The company’s financial performance was satisfactory. Total sales for 2006 improved by 13% from 2005, due to the increased contribution from particle board sales. The total debt to capitalization ratio, though high, improved from 76.65% in 2005 to 65.68% in 2006, partly due to the divestment of the debt-financed power plant. The earnings before interest, tax, depreciation and amortization (EBITDA) interest coverage ratio decreased slightly, from 3.96 times in 2005 to 3.61 times in 2006.
TRIS Rating said, sugarcane production has been very volatile, depending on natural rainfall, plantation area, and cane prices relative to competing products. After declining continuously from a historic high of 74 million tonnes in the 2002/2003 production period to 47 million tonnes in 2005/2006, sugarcane production in 2006/2007 soared to 63.8 million tonnes, due to the improving water situation and higher sugar and sugarcane prices at the beginning of the crushing period. Sugarcane production in the 2007/2008 period is expected to be at least the same level as the 2006/2007 period as water is plentiful.
Though the domestic sugar price is relatively stable, the export price is volatile, depending on the world demand and supply of sugar and related products. The world raw sugar price increased sharply from 10.67 cents/lb in 2004/2005 to 18.93 cents/lb in February 2006, then gradually declined to 10.78 cents/lb in May 2007, said TRIS Rating. -- End
United Farmer & Industry Co., Ltd. (UFIC)
Company Rating: Affirmed at BBB+
Issue Ratings:
UFIC07NA: Bt500 million senior secured debentures due 2007 Affirmed at BBB+
UFIC08NA: Bt500 million senior secured debentures due 2008 Affirmed at BBB+
UFIC09OA: Bt500 million senior secured debentures due 2009 Affirmed at BBB+
Rating Outlook: Stable
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Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
The “stable” outlook reflects TRIS Rating’s expectation that the Mitr Phol Group will continue to maintain its leading position in Thailand’s sugar business, and UFIC will continue to be the major domestic sugar producer within the group. Due to the recent increased volume of sugarcane and moderating sugar price, UFIC’s sugar business is expected to generate sales of approximately Bt6,000-Bt7,000 million and EBITDA of Bt1,200-Bt1,500 million per year during 2007-2008.
TRIS Rating reported that UFIC is the major sugar producer within the Mitr Phol Group, the leader in the Thai sugar and sugarcane industry. Of the five domestic sugar mills within the group, UFIC operates three sugar processing plants in the Northeastern Thailand, with the combined cane crushing capacity of 70,000 cane tonnes per day, representing approximately 60% of the total crushing capacity of the Mitr Phol Group in Thailand. During the last five years, the Mitr Phol Group has maintained the largest market share in sugarcane at 17%-18%. For the 2006/2007 production period, the Mitr Phol Group continues to be the largest sugar producer in Thailand with an 18.9% market share, followed by Thai Roong Ruang Group (18.1%), Thai Ekkalak Group (14.0%), and KSL Group (8.3%).
TRIS Rating said that UFIC’s sugar production in the 2006/2007 crushing period was approximately 784,000 tonnes, up by 43% from the previous year and better than the 38% average growth of the industry. Its crushing yield of 108.16 kilograms (kg.) per cane tonne was better than the industry average of 104.94 kg. The company’s financial performance was satisfactory. Total sales for 2006 improved by 13% from 2005, due to the increased contribution from particle board sales. The total debt to capitalization ratio, though high, improved from 76.65% in 2005 to 65.68% in 2006, partly due to the divestment of the debt-financed power plant. The earnings before interest, tax, depreciation and amortization (EBITDA) interest coverage ratio decreased slightly, from 3.96 times in 2005 to 3.61 times in 2006.
TRIS Rating said, sugarcane production has been very volatile, depending on natural rainfall, plantation area, and cane prices relative to competing products. After declining continuously from a historic high of 74 million tonnes in the 2002/2003 production period to 47 million tonnes in 2005/2006, sugarcane production in 2006/2007 soared to 63.8 million tonnes, due to the improving water situation and higher sugar and sugarcane prices at the beginning of the crushing period. Sugarcane production in the 2007/2008 period is expected to be at least the same level as the 2006/2007 period as water is plentiful.
Though the domestic sugar price is relatively stable, the export price is volatile, depending on the world demand and supply of sugar and related products. The world raw sugar price increased sharply from 10.67 cents/lb in 2004/2005 to 18.93 cents/lb in February 2006, then gradually declined to 10.78 cents/lb in May 2007, said TRIS Rating. -- End
United Farmer & Industry Co., Ltd. (UFIC)
Company Rating: Affirmed at BBB+
Issue Ratings:
UFIC07NA: Bt500 million senior secured debentures due 2007 Affirmed at BBB+
UFIC08NA: Bt500 million senior secured debentures due 2008 Affirmed at BBB+
UFIC09OA: Bt500 million senior secured debentures due 2009 Affirmed at BBB+
Rating Outlook: Stable
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Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.