TRIS Rating affirms the company rating on BTS Group Holdings PLC (BTS) and the ratings on BTS?s outstanding senior unsecured debentures at ?A?, with a ?negative? outlook. At the same time, TRIS Rating assigns a ?A? rating to BTS?s proposed issue of up to THB20 billion in senior unsecured debentures. The proceeds from the new debentures will be used for debt repayment.
The ratings continue to reflect the company?s strong business profile based on the steady service income from its sky train operation, the sizable cash flow received from its 33.33% investment in BTS Rail Mass Transit Growth Infrastructure Fund (BTSGIF), and its entrenched position in the media business. The ratings, however, are constrained by the surge in BTS?s financial leverage to fund several investment projects.
In the first quarter of fiscal year (FY) 2023 (April-June 2022), BTS?s revenue (excluding revenue from installation and construction services and train procurement service) increased by 27% to THB3.0 billion. The rise was mainly attributed to the consolidation of Fanslink Communication Co., Ltd. However, BTS?s earnings before interest, taxes, depreciation, and amortization (EBITDA) dropped by 5% to THB2.1 billion in the first quarter of FY2023. BTS?s debt to EBITDA ratio, inclusive of debts to finance account receivable from Bangkok Metropolitan Administration (BMA), declined to 12.4 times (annualized, from the trailing 12 months) in the first quarter of FY2023, compared with 13.4 times in FY2022. Adjusted for accounts receivable from the BMA in the calculation of debt, the company?s debt to EBITDA ratio was at 7.4 times in the first quarter of FY2023.
As of June 2022, BTS?s total interest-bearing debt of THB112 billion included the priority debt of THB37 billion. The priority debt comprised secured debts and unsecured debts at the subsidiary level. The company?s priority debt to total debt ratio was 33%.
RATING OUTLOOK
The ?negative? outlook reflects the likelihood of a significant rise in BTS?s financial leverage from its planned investments which could lead to material deterioration in credit metrics to a degree that may not be commensurate with current ratings.
RATING SENSITIVITIES
A rating upgrade is unlikely over the next few years as we expect the company?s leverage to remain high. The outlook could be revised to ?stable? if BTS?s leverage significantly declines which is possible if the company is repaid all amounts owed by the BMA and the performance of its media business quickly recovers. The ratings could be revised downward if its adjusted net debt to EBITDA ratio stays over 8 times on a sustained basis.
RELATED CRITERIA
- Corporate Rating Methodology , 15 July 2022
- Key Financial Ratio and Adjustments for Corporate Issuers, 11 January 2022
- Issue Rating Criteria, 15 June 2021
BTS Group Holdings PLC (BTS)
Company Rating: A
Issue Ratings:
BTSG22NA: THB500 million senior unsecured debentures due 2022 A
BTSG22DA: THB1,500 million senior unsecured debentures due 2022 A
BTSG239A: THB1,290 million senior unsecured debentures due 2023 A
BTSG23NA: THB4,000 million senior unsecured debentures due 2023 A
BTSG245A: THB3,000 million senior unsecured debentures due 2024 A
BTSG247A: THB1,500 million senior unsecured debentures due 2024 A
BTSG255A: THB700 million senior unsecured debentures due 2025 A
BTSG25NA: THB1,500 million senior unsecured debentures due 2025 A
BTSG265A: THB2,700 million senior unsecured debentures due 2026 A
BTSG267A: THB3,500 million senior unsecured debentures due 2026 A
BTSG275A: THB2,800 million senior unsecured debentures due 2027 A
BTSG27NA: THB2,000 million senior unsecured debentures due 2027 A
BTSG27DA: THB2,000 million senior unsecured debentures due 2027 A
BTSG289A: THB4,660 million senior unsecured debentures due 2028 A
BTSG295A: THB5,000 million senior unsecured debentures due 2029 A
BTSG295B: THB3,800 million senior unsecured debentures due 2029 A
BTSG29DA: THB2,000 million senior unsecured debentures due 2029 A
BTSG30NA: THB600 million senior unsecured debentures due 2030 A
BTSG317A: THB8,000 million senior unsecured debentures due 2031 A
BTSG325A: THB3,700 million senior unsecured debentures due 2032 A
Up to THB20,000 million senior unsecured debentures due within 10 years A
Rating Outlook: Negative