TRIS Rating Co., Ltd. has affirmed the company and issue ratings (CPF063A) of Charoen Pokphand Foods PLC (CPF) at "A". At the same time, TRIS Rating has assigned the ratings of "A" to each of CPF's three issues of proposed senior debentures totaling Bt6,000 million. The ratings continue to reflect the company's competitive advantages stemming from its leading position in Thailand's agribusiness industry, its product and market diversification, and management's ability to respond to the ever-changing business environment. The recurrence of bird flu outbreaks are among the risk factors affecting the company's performance. However, the lower-than-expected performance of the company's chicken operation should be partly offset by the brighter prospects of its shrimp operation. The "stable" outlook reflects CPF's ability to maintain its leading position in the Thai agribusiness industry. The company's emphasis on processed chicken means its exports have been less affected by concerns over the bird flu epidemic. The low preliminary anti-dumping rate is expected to have a positive effect on Thai shrimp exports to the US market. The company is expected to maintain its financial position and improve its operating performance in the medium term.
TRIS Rating reorted that CPF is the largest agribusiness company in Thailand and regarded as the flagship agribusiness of the Charoen Pokphand Group (CPG). The company's business is divided into two categories, livestock and aquaculture, which accounted approximately 70% and 30% of total sales respectively during the last three years. CPF's net profit increased to Bt901 million for the second quarter of 2004 after reporting a Bt598 million net loss for the first quarter. The improved performance in the second quarter of 2004 was due mainly to higher average market prices for livestock meat and an increase in aquaculture feed sales.
The return of avian influenza in July 2004 negatively affected poultry consumption. The ban on imported frozen chicken from Thailand by the European Union (EU) has been extended to March 2005. For the first eight months of 2004, total Thai chicken exports were Bt13,433 million, 48% less than the same period in 2003. While raw chicken exports decreased by 89%, processed chicken exports increased by 13%. The industry's shift to processed products supports CPF's performance, as it has greater processing capacity than its competitors. Thai shrimp export prospects are expected to improve following the July 2004 announcement of the preliminary determination in the US anti-dumping case. Thailand will be charged in the range of 5.56% to 10.25%. The average rate of 6.39% for Thailand is less than the average rates of 7.30% to 49.09% for China, Vietnam, India, Ecuador and Brazil. The lowest average rate makes Thai shrimp more competitive in the US market and encourages Thai shrimp farmers to return to farming, increasing demand for shrimp feed and breeder stock. In response to the brighter prospects for the shrimp business, CPF is shifting focus to expand its shrimp processing factories to increase its capacity for export products. As a result, CPF's aquaculture business is expected to improve, starting in 2005.
TRIS Rating said that the proceeds of CPF's proposed senior debentures will be used mainly to refinance existing debentures and to fund expansion. Most of the bond covenants are the same as in the existing debentures except for the requirement that CPG and/or its related companies must hold at least 20% of CPF shares instead of 30%. -- End
Charoen Pokphand Foods PLC (CPF) Company Rating: Affirmed at A Issue Rating: CPF063A: Bt7,000 million senior debentures due 2006 Affirmed at A CPF#1-3: Up to Bt6,000 million senior debentures due 2007, 2009, 2009 A Rating Outlook: Stable
TRIS Rating reorted that CPF is the largest agribusiness company in Thailand and regarded as the flagship agribusiness of the Charoen Pokphand Group (CPG). The company's business is divided into two categories, livestock and aquaculture, which accounted approximately 70% and 30% of total sales respectively during the last three years. CPF's net profit increased to Bt901 million for the second quarter of 2004 after reporting a Bt598 million net loss for the first quarter. The improved performance in the second quarter of 2004 was due mainly to higher average market prices for livestock meat and an increase in aquaculture feed sales.
The return of avian influenza in July 2004 negatively affected poultry consumption. The ban on imported frozen chicken from Thailand by the European Union (EU) has been extended to March 2005. For the first eight months of 2004, total Thai chicken exports were Bt13,433 million, 48% less than the same period in 2003. While raw chicken exports decreased by 89%, processed chicken exports increased by 13%. The industry's shift to processed products supports CPF's performance, as it has greater processing capacity than its competitors. Thai shrimp export prospects are expected to improve following the July 2004 announcement of the preliminary determination in the US anti-dumping case. Thailand will be charged in the range of 5.56% to 10.25%. The average rate of 6.39% for Thailand is less than the average rates of 7.30% to 49.09% for China, Vietnam, India, Ecuador and Brazil. The lowest average rate makes Thai shrimp more competitive in the US market and encourages Thai shrimp farmers to return to farming, increasing demand for shrimp feed and breeder stock. In response to the brighter prospects for the shrimp business, CPF is shifting focus to expand its shrimp processing factories to increase its capacity for export products. As a result, CPF's aquaculture business is expected to improve, starting in 2005.
TRIS Rating said that the proceeds of CPF's proposed senior debentures will be used mainly to refinance existing debentures and to fund expansion. Most of the bond covenants are the same as in the existing debentures except for the requirement that CPG and/or its related companies must hold at least 20% of CPF shares instead of 30%. -- End
Charoen Pokphand Foods PLC (CPF) Company Rating: Affirmed at A Issue Rating: CPF063A: Bt7,000 million senior debentures due 2006 Affirmed at A CPF#1-3: Up to Bt6,000 million senior debentures due 2007, 2009, 2009 A Rating Outlook: Stable