TRIS Rating Co., Ltd. has upgraded the company rating of Thai Beverage PLC (ThaiBev) and the ratings of ThaiBev’s senior guaranteed debentures (TBEV072A, TBEV078A, TBEV082A) to “AA-” from “A+” with “stable” outlook. The upgraded ratings reflect ThaiBev’s strengthened capital structure after an initial public offering (IPO) in May 2006. Almost all the proceeds were used to repay ThaiBev’s outstanding debt. The ratings continue to reflect the dominant position of the ThaiBev Group in the Thai alcoholic beverage market, its experienced and capable management team, economies of scale as the largest brewer and distiller, strong and stable cash flow, and an extensive distribution network. These strengths are partially offset by the intensely competitive environment and regulatory risk that could slow the growth of alcoholic beverage consumption.
The “stable” outlook is based on the expectation that ThaiBev will maintain its competitiveness and leading position in the beer and spirits markets, although the company is facing high competition from local brewers and spirits importers. With ThaiBev’s stable cash flow, TRIS Rating expects ThaiBev to maintain its current financial profile with no huge debt-financed acquisition.
TRIS Rating reported that ThaiBev is the leading producer of beer and spirits in Thailand and one
of the leading brewer and distillers in Southeast Asia. ThaiBev is a holding company that controls over 80 companies. The group produces and distributes a wide variety of alcoholic beverages including beer, traditional white spirits, brown spirits, admixed whisky, Chinese herb spirits, and Japanese spirits. The brands in its portfolio, such as Mekhong, Sang Som, and Ruang Khao for spirits and Chang for beer, are well-known and are local market leaders. The majority of ThaiBev’s brands target the economy segment of the alcoholic beverage market, which clearly is the largest segment. Chang Beer, the best-selling beer brand in Thailand, together with Archa Beer, had a combined 53% share of the Thai beer market in 2005. The company also had 74% of the Thai spirits market in 2005 from sales of well-known brands, including Sang Som, Mekhong, Mungkorn Thong, Ruang Khao, and Pai Thong.
Although ThaiBev has maintained the leading position in the Thai beer market, its beer sales have slowed since 2003. As a result, Boon Rawd Brewery Group, ThaiBev’s major competitor, has regained market share. However, with annual production capacities of 1,090 million liters of beer and 808 million liters of spirits in Thailand, ThaiBev has a certain degree of purchasing power for raw materials. Moreover, its 17 distillers located throughout Thailand give the company a logistical advantage. ThaiBev’s extensive distribution network and efficient salesforce strengthens its leading position. Currently, the company’s distribution network consists of 2,600 agents, with more than 900 direct sales persons and 400 warehouses to serve more than 400,000 retail outlets throughout Thailand. ThaiBev’s high operating margin reflects its operating efficiency. The company has generated around Bt15,000 million in funds from operations (FFO) each year for the last three years. ThaiBev’s leverage ratio has improved significantly, falling from 56% in 2005 to 31% as of September 2006, because the company repaid its huge debts after a capital increase in June 2006. advertising limits and sales period restrictions.
The ThaiBev management team has a proven track record, lengthy experience, and in-depth
knowledge of the Thai spirits industry. Besides, the Thai beer market has room to grow. The per capita consumption rate of 28.89 liters per person per year is considered low compared with the top 20 beer
markets around the world. Thailand’s beer market has been dominated by a few producers, but still has
a high degree of competition. High advertising budgets, extensive use of promotions, and price cutting
were widely used to stimulate sales during the past five years. During 2002-2006, beer sales increased
by an average of 9.6% per annum. Regulation is the major influence of demand for alcoholic beverage.
Thai government policy continues to emphasize the negative effects of alcohol consumption on Thai
society. Actions implemented to cut alcoholic beverage consumption include excise tax increases,
advertising limits, and sales restrictions. These restrictions may cause the Thai alcoholic beverage market
grow at a slower rate but the market for lighter alcohol content is expected to grow at a higher rate, said
TRIS Rating. -- End
Thai Beverage PLC (ThaiBev)
Company Rating: Upgraded to AA- from A+
Issue Ratings:
TBEV072A: Bt2,200 million senior guaranteed debentures due 2007 Upgraded to AA- from A+
TBEV078A: Bt2,300 million senior guaranteed debentures due 2007 Upgraded to AA- from A+
TBEV082A: Bt3,000 million senior guaranteed debentures due 2008 Upgraded to AA- from A+
Rating Outlook: Stable
---------------------------------------------------------------------
Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
The “stable” outlook is based on the expectation that ThaiBev will maintain its competitiveness and leading position in the beer and spirits markets, although the company is facing high competition from local brewers and spirits importers. With ThaiBev’s stable cash flow, TRIS Rating expects ThaiBev to maintain its current financial profile with no huge debt-financed acquisition.
TRIS Rating reported that ThaiBev is the leading producer of beer and spirits in Thailand and one
of the leading brewer and distillers in Southeast Asia. ThaiBev is a holding company that controls over 80 companies. The group produces and distributes a wide variety of alcoholic beverages including beer, traditional white spirits, brown spirits, admixed whisky, Chinese herb spirits, and Japanese spirits. The brands in its portfolio, such as Mekhong, Sang Som, and Ruang Khao for spirits and Chang for beer, are well-known and are local market leaders. The majority of ThaiBev’s brands target the economy segment of the alcoholic beverage market, which clearly is the largest segment. Chang Beer, the best-selling beer brand in Thailand, together with Archa Beer, had a combined 53% share of the Thai beer market in 2005. The company also had 74% of the Thai spirits market in 2005 from sales of well-known brands, including Sang Som, Mekhong, Mungkorn Thong, Ruang Khao, and Pai Thong.
Although ThaiBev has maintained the leading position in the Thai beer market, its beer sales have slowed since 2003. As a result, Boon Rawd Brewery Group, ThaiBev’s major competitor, has regained market share. However, with annual production capacities of 1,090 million liters of beer and 808 million liters of spirits in Thailand, ThaiBev has a certain degree of purchasing power for raw materials. Moreover, its 17 distillers located throughout Thailand give the company a logistical advantage. ThaiBev’s extensive distribution network and efficient salesforce strengthens its leading position. Currently, the company’s distribution network consists of 2,600 agents, with more than 900 direct sales persons and 400 warehouses to serve more than 400,000 retail outlets throughout Thailand. ThaiBev’s high operating margin reflects its operating efficiency. The company has generated around Bt15,000 million in funds from operations (FFO) each year for the last three years. ThaiBev’s leverage ratio has improved significantly, falling from 56% in 2005 to 31% as of September 2006, because the company repaid its huge debts after a capital increase in June 2006. advertising limits and sales period restrictions.
The ThaiBev management team has a proven track record, lengthy experience, and in-depth
knowledge of the Thai spirits industry. Besides, the Thai beer market has room to grow. The per capita consumption rate of 28.89 liters per person per year is considered low compared with the top 20 beer
markets around the world. Thailand’s beer market has been dominated by a few producers, but still has
a high degree of competition. High advertising budgets, extensive use of promotions, and price cutting
were widely used to stimulate sales during the past five years. During 2002-2006, beer sales increased
by an average of 9.6% per annum. Regulation is the major influence of demand for alcoholic beverage.
Thai government policy continues to emphasize the negative effects of alcohol consumption on Thai
society. Actions implemented to cut alcoholic beverage consumption include excise tax increases,
advertising limits, and sales restrictions. These restrictions may cause the Thai alcoholic beverage market
grow at a slower rate but the market for lighter alcohol content is expected to grow at a higher rate, said
TRIS Rating. -- End
Thai Beverage PLC (ThaiBev)
Company Rating: Upgraded to AA- from A+
Issue Ratings:
TBEV072A: Bt2,200 million senior guaranteed debentures due 2007 Upgraded to AA- from A+
TBEV078A: Bt2,300 million senior guaranteed debentures due 2007 Upgraded to AA- from A+
TBEV082A: Bt3,000 million senior guaranteed debentures due 2008 Upgraded to AA- from A+
Rating Outlook: Stable
---------------------------------------------------------------------
Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.