TRIS Rating Co., Ltd. has affirmed the rating of Saha Pathana Inter-Holding PLC (SPI) and the rating of SPI's Bt1,000 million senior debentures (SPI071A) at "A". The ratings reflect SPI's diversified investments, the long experience and capability of its management team, and the leading positions of the group's core businesses: garments, cosmetics and instant noodles. The ratings also take into consideration SPI's conservative investment policy and its improving financial status. However, the competitive environment of the consumer product and food industries puts these strengths under constant pressure to perform. Moreover, the ratings are also offset by Saha Group's complex shareholding structure of its investments.
TRIS Rating reported that SPI, the major holding company of Saha Group, is responsible for initiating and investing in new businesses, providing debt and guarantee support to affiliates, facilitating industrial parks and infrastructure, and providing other services. Currently, SPI has investments in 170 diversified companies, mainly in consumer products and foods. The diversity of its investments has protected the company against risk both from cash flow concentration in individual businesses and from economic cyclicality. The company confines its investments to a small percentage of each company's share capital to further minimize risk of loss; however, total combined investment by the Saha Group in each company is big enough to ensure that the Saha Group can control or jointly control the operation of its investments.
TRIS Rating said, the management teams of the group's core businesses are capable, and with policy guidance from SPI's competent management team, Saha Group's companies have been able to maintain leading positions in various markets. The ability of Saha Group to sustain its competitive advantage through branding is apparent in its garment, cosmetic and instant noodle businesses. Possessing many well-respected brand names and unique know-how are important elements in its competitiveness. The integrated business structure of the group, both vertical and horizontal, is another key to success. The major segments in which the group has very competitive positions, with significant market shares, are intimate apparel, cosmetics and instant noodles. However, the very competitive nature of the businesses challenges the group to innovate continuously and to improve its costs to sustain its leading positions.
The capital structure of SPI has significantly improved in recent years. Total debt, including guarantees, as a percentage of capitalization, has declined from 58.40% in 1997 to 26.90% in 2002 and to 21.04% in 2003, as a result of both increased retained earnings and lower debt. Moreover, the company policy to continuously reduce guarantees to affiliates has greatly reduced its exposure from Bt2,673 million in 1997 to as low as Bt370 million in 2003. At the same time, SPI's ability to generate adequate cash flow has improved. After the economic crisis, SPI's funds from operation (FFO) interest coverage ratio was 1.25 times in 1998. It more than trippled to 4.05 times in 2002 and increased further to 6.2 times, in 2003. Similarly, FFO as a percent of total debt, which was below 5% from 1997 through 2000, improved significantly, to 14.22% in 2002 and to 25.70% in 2003.
The complexity of the cross holding structure within Saha Group makes it difficult for investors to comprehend the group and evaluate it as a whole. However, all transactions among SPI and companies in the Saha Group conform to the regulations of the Stock Exchange of Thailand (SET), TRIS Rating said.-- End
Saha Pathana Inter-Holding PLC (SPI)Company Rating: Affirmed at A Issue Rating:SPI071A Bt1,000 million senior debentures due 2007 Affirmed at A
TRIS Rating reported that SPI, the major holding company of Saha Group, is responsible for initiating and investing in new businesses, providing debt and guarantee support to affiliates, facilitating industrial parks and infrastructure, and providing other services. Currently, SPI has investments in 170 diversified companies, mainly in consumer products and foods. The diversity of its investments has protected the company against risk both from cash flow concentration in individual businesses and from economic cyclicality. The company confines its investments to a small percentage of each company's share capital to further minimize risk of loss; however, total combined investment by the Saha Group in each company is big enough to ensure that the Saha Group can control or jointly control the operation of its investments.
TRIS Rating said, the management teams of the group's core businesses are capable, and with policy guidance from SPI's competent management team, Saha Group's companies have been able to maintain leading positions in various markets. The ability of Saha Group to sustain its competitive advantage through branding is apparent in its garment, cosmetic and instant noodle businesses. Possessing many well-respected brand names and unique know-how are important elements in its competitiveness. The integrated business structure of the group, both vertical and horizontal, is another key to success. The major segments in which the group has very competitive positions, with significant market shares, are intimate apparel, cosmetics and instant noodles. However, the very competitive nature of the businesses challenges the group to innovate continuously and to improve its costs to sustain its leading positions.
The capital structure of SPI has significantly improved in recent years. Total debt, including guarantees, as a percentage of capitalization, has declined from 58.40% in 1997 to 26.90% in 2002 and to 21.04% in 2003, as a result of both increased retained earnings and lower debt. Moreover, the company policy to continuously reduce guarantees to affiliates has greatly reduced its exposure from Bt2,673 million in 1997 to as low as Bt370 million in 2003. At the same time, SPI's ability to generate adequate cash flow has improved. After the economic crisis, SPI's funds from operation (FFO) interest coverage ratio was 1.25 times in 1998. It more than trippled to 4.05 times in 2002 and increased further to 6.2 times, in 2003. Similarly, FFO as a percent of total debt, which was below 5% from 1997 through 2000, improved significantly, to 14.22% in 2002 and to 25.70% in 2003.
The complexity of the cross holding structure within Saha Group makes it difficult for investors to comprehend the group and evaluate it as a whole. However, all transactions among SPI and companies in the Saha Group conform to the regulations of the Stock Exchange of Thailand (SET), TRIS Rating said.-- End
Saha Pathana Inter-Holding PLC (SPI)Company Rating: Affirmed at A Issue Rating:SPI071A Bt1,000 million senior debentures due 2007 Affirmed at A