TRIS Rating Co., Ltd. announced that it has assigned the company rating of I.C.C. International PLC (ICC) at "AA-". The rating is based on ICC's strong financial profile with low leverage and high cash flow protection, the long experience and capability of its management team, the diversification of its product ranges and brands, and its position as the leading distributor of its core products: lingerie, men's apparel and cosmetics. The rating also takes into consideration ICC's low profitability, exposure to loans and guarantees to related companies, and its complex shareholding structure. In addition, the highly competitive environment for consumer goods and the increasing influence of modern retail trade such as hypermarket and specialty store may test the company's ability to sustain its position in the future.
TRIS Rating reported that ICC is one of Thailand's largest wholesalers. Its activities are the distribution and marketing of consumer products, particularly apparel and cosmetics. It offers products in the Thai market under more than 40 brands, most long-established and widely accepted among Thai consumers, such as Wacoal, Arrow, Pias, Guy Laroche, ELLE, Lacoste and Itokin. Although the company relies heavily on international brand names, ICC has continuously launched its own brands into the market such as Kullastri, Enfant, Essence, St. Andrews, POP Line and its latest brand BSC. The major segments in which ICC has very competitive positions and significant market shares are lingerie, men's apparel and to a lesser extent cosmetics. Wacoal is considered the dominant leader in lingerie, while Arrow and Pias control significant market shares of the middle and upper market segments respectively in the men's apparel and cosmetics markets.
The key distribution channel of ICC is department stores. However, the increasing influence of modern retail trade has prompted ICC to adjust to this trend by launching new brands such as POP Line and St. Andrews for distribution through modern retail trade channels, while not deteriorating its existing brand image. With a strong market position and a variety of products, ICC still maintains its considerable bargaining power over its distribution channels. A management team with long experience and support from suppliers within Saha Group has made the company a leading distributor in Thailand and allows it to successfully maintain its leading positions in various target markets.
ICC's strong financial profile is reflected in low leverage and high cash flow protection. Its total debt to capitalization has stayed in single digits since 1998 and recorded only 5.64% in 2001. If its debt is adjusted by including loans and guarantees to related parties, its total debt to capitalization was 12.74% in 2001. Moreover, management intends to maintain its conservative leverage continuously in the future. Because of limited debt in its capital structure, the company's cash flow protection is very healthy. EBITDA interest coverage was 24.86 times and adjusted funds from operation (FFO) to total debt was 64.60% in 2001. ICC has maintained gross margins at approximately 30% of sales. However, the company has recorded low operating profit margins, especially during the economic crisis in 1997-1998 when its operating profit before depreciation and amortization as a percent of sales was around 3%. After its sales improved, ICC's operating profit before depreciation and amortization as a percent of sales has been around 8% to 9% during 1999-2001.
ICC relies heavily on suppliers under Saha Group umbrella. ICC has equity investments in its suppliers and has joint management in some of its suppliers. At the same time, some suppliers are shareholders in ICC. The major benefit of this structure to ICC is ensuring good cooperation with its suppliers for development of products and raw materials. However, the complexity of its and Saha Group's shareholding structure may baffle investors evaluating the company, TRIS Rating said. -- End
I.C.C. International PLC (ICC) Company Rating: AA-
TRIS Rating reported that ICC is one of Thailand's largest wholesalers. Its activities are the distribution and marketing of consumer products, particularly apparel and cosmetics. It offers products in the Thai market under more than 40 brands, most long-established and widely accepted among Thai consumers, such as Wacoal, Arrow, Pias, Guy Laroche, ELLE, Lacoste and Itokin. Although the company relies heavily on international brand names, ICC has continuously launched its own brands into the market such as Kullastri, Enfant, Essence, St. Andrews, POP Line and its latest brand BSC. The major segments in which ICC has very competitive positions and significant market shares are lingerie, men's apparel and to a lesser extent cosmetics. Wacoal is considered the dominant leader in lingerie, while Arrow and Pias control significant market shares of the middle and upper market segments respectively in the men's apparel and cosmetics markets.
The key distribution channel of ICC is department stores. However, the increasing influence of modern retail trade has prompted ICC to adjust to this trend by launching new brands such as POP Line and St. Andrews for distribution through modern retail trade channels, while not deteriorating its existing brand image. With a strong market position and a variety of products, ICC still maintains its considerable bargaining power over its distribution channels. A management team with long experience and support from suppliers within Saha Group has made the company a leading distributor in Thailand and allows it to successfully maintain its leading positions in various target markets.
ICC's strong financial profile is reflected in low leverage and high cash flow protection. Its total debt to capitalization has stayed in single digits since 1998 and recorded only 5.64% in 2001. If its debt is adjusted by including loans and guarantees to related parties, its total debt to capitalization was 12.74% in 2001. Moreover, management intends to maintain its conservative leverage continuously in the future. Because of limited debt in its capital structure, the company's cash flow protection is very healthy. EBITDA interest coverage was 24.86 times and adjusted funds from operation (FFO) to total debt was 64.60% in 2001. ICC has maintained gross margins at approximately 30% of sales. However, the company has recorded low operating profit margins, especially during the economic crisis in 1997-1998 when its operating profit before depreciation and amortization as a percent of sales was around 3%. After its sales improved, ICC's operating profit before depreciation and amortization as a percent of sales has been around 8% to 9% during 1999-2001.
ICC relies heavily on suppliers under Saha Group umbrella. ICC has equity investments in its suppliers and has joint management in some of its suppliers. At the same time, some suppliers are shareholders in ICC. The major benefit of this structure to ICC is ensuring good cooperation with its suppliers for development of products and raw materials. However, the complexity of its and Saha Group's shareholding structure may baffle investors evaluating the company, TRIS Rating said. -- End
I.C.C. International PLC (ICC) Company Rating: AA-