TRIS Rating Co., Ltd. has upgraded the company rating of Vinythai PLC (VNT) and the rating of VNT's Bt7,400 million senior secured debentures (VNT068A) to "BBB+" from "BBB". The rating outlook has been removed to "stable" from "positive". The ratings are based on VNT's low cost position, its capable management team and support from its principal shareholders, Solvay S.A. of Belgium and Charoen Pokphand Group (CP). The ratings also take into consideration the company's improving financial position from the low leverage and conservative financial policy of the management. However, the price competition of polyvinyl chloride (PVC) in the domestic market will limit the profit margins of Thai producers. In addition, wide fluctuations in PVC prices and margins are unfavorable factors for the credit rating.
While the "stable" outlook reflects the expectation that the company will be able to maintain its low cost position and execute the expansion projects to double the capacity of all of its intermediate products as scheduled. TRIS Rating expects the management to continue its conservative financial policy in the intermediate and long term.
TRIS Rating reported that the petrochemical industry is on an uptrend, boosting the demand and price of most petrochemical products, including PVC. In 2004, VNT, Thailand's second largest PVC manufacturer, has achieved an impressive performance with a 23.1% increase in sales over the previous year and posting a historical high net income from operation of Bt1,372 million. Combining high profitability with low leverage, VNT's financial position at the end of 2004 is considered strong.
VNT has undergone the expansion plan to double the capacity of all intermediate products. The expansion projects are planned to be funded by equity from Thai Olefins PLC (TOC), the company that has an agreement to provide ethylene to VNT, for 56.8% of total project cost and the balance will be sourced from a long-term bank loan. Although the financing of the expansion projects is conservatively structured, VNT's financial status will deteriorate slightly, especially in the next few years, but remains acceptable. The expansion project is expected to benefit the company for the long run, TRIS Rating said. -- End.
Vinythai PLC (VNT) Company Rating: BBB+ Issue Rating: VNT068A: Bt7,400 million senior secured debentures due 2006 BBB+ Rating Outlook: Stable
While the "stable" outlook reflects the expectation that the company will be able to maintain its low cost position and execute the expansion projects to double the capacity of all of its intermediate products as scheduled. TRIS Rating expects the management to continue its conservative financial policy in the intermediate and long term.
TRIS Rating reported that the petrochemical industry is on an uptrend, boosting the demand and price of most petrochemical products, including PVC. In 2004, VNT, Thailand's second largest PVC manufacturer, has achieved an impressive performance with a 23.1% increase in sales over the previous year and posting a historical high net income from operation of Bt1,372 million. Combining high profitability with low leverage, VNT's financial position at the end of 2004 is considered strong.
VNT has undergone the expansion plan to double the capacity of all intermediate products. The expansion projects are planned to be funded by equity from Thai Olefins PLC (TOC), the company that has an agreement to provide ethylene to VNT, for 56.8% of total project cost and the balance will be sourced from a long-term bank loan. Although the financing of the expansion projects is conservatively structured, VNT's financial status will deteriorate slightly, especially in the next few years, but remains acceptable. The expansion project is expected to benefit the company for the long run, TRIS Rating said. -- End.
Vinythai PLC (VNT) Company Rating: BBB+ Issue Rating: VNT068A: Bt7,400 million senior secured debentures due 2006 BBB+ Rating Outlook: Stable