TRIS Rating Co., Ltd. has affirmed the company rating of Vinythai PLC (VNT) at “BBB+” with “stable” outlook. The rating is based on VNT’s efficient fully-integrated production platform fully integration production, low leverage, aits capable management team and support from its principal shareholders, Solvay S.A. of Belgium, PTT Chemical PLC (PTTCH), and Charoen Pokphand Group (CP Group). However, these strengths are partially offset by the cyclical nature of the petrochemical industry, the increasing competition from Chinese producers, and declining profitability that is the result of affected by rising ethylene prices.
The “stable” outlook reflects the expectations that VNT will be able to maintain its low cost position and there will be no major threats to the PVC industry. TRIS Rating expects VNT’s management to continue its conservative financial policy in the intermediate and long
term.
TRIS Rating reported that VNT is Thailand’s second largest polyvinyl chloride (PVC) PVC manufacturer, with capacity of 210,000 metric tons per annum accounted for about 26% of total domestic capacity. Major shareholders have extended full supports to VNT’s operation: Solvay provides technical support and a distribution channel in for the international market, PTTCH supplies ethylene, and CP Group is one of the company’s key customers. The PVC plant is fully backward integratedion, yielding VNT athe premium operating margin to VNT overcompared with its rivals. However, due to a substantial rise in the price of with the greatly rising ethylene over PVC price in 2006, VNT’sits operating margin dropped significantly dropped. If thise pricing trend persists, VNT’s profitability will be questionablethreathened. The competition is more severe in both the domestic and international markets, which China remains as the main driver. Huge supply in China has come onlinebeen made available, which has both resulting to pressured PVC prices and reduced PVC exportsexport to China.
In 2006, while VNT’s performance financial profile was slightly weaker ning than in compared to 2005, but it remained strong. Although its operating margin was negatively impacted by the increasing cost of ethylene and
The main reasons were the reduction of PVC production due to the plant shut down and the increasing ethylene cost. However, thanks to the low leverage, VNT’s cash flow protection and liquidity is satisfactory. VNT’s vinyl chloride monomer (VCM) expansion was under the commissioning and is expected to be completed in the first quarter of 2007. Hence, in 2007, VNT shwould recognize greaterly increase income from VCM sales and additional caustic soda capacity. The company plans to expand PVC capacity for by 70,000 metric tons per annum. The project cost is Bt840 million, with a scheduled and the completion is scheduled in mid 2008, said TRIS Rating. -- End
Vinythai PLC (VNT)
Company Rating: Affirmed at BBB+
Rating Outlook: Stable
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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 reflects the expectations that VNT will be able to maintain its low cost position and there will be no major threats to the PVC industry. TRIS Rating expects VNT’s management to continue its conservative financial policy in the intermediate and long
term.
TRIS Rating reported that VNT is Thailand’s second largest polyvinyl chloride (PVC) PVC manufacturer, with capacity of 210,000 metric tons per annum accounted for about 26% of total domestic capacity. Major shareholders have extended full supports to VNT’s operation: Solvay provides technical support and a distribution channel in for the international market, PTTCH supplies ethylene, and CP Group is one of the company’s key customers. The PVC plant is fully backward integratedion, yielding VNT athe premium operating margin to VNT overcompared with its rivals. However, due to a substantial rise in the price of with the greatly rising ethylene over PVC price in 2006, VNT’sits operating margin dropped significantly dropped. If thise pricing trend persists, VNT’s profitability will be questionablethreathened. The competition is more severe in both the domestic and international markets, which China remains as the main driver. Huge supply in China has come onlinebeen made available, which has both resulting to pressured PVC prices and reduced PVC exportsexport to China.
In 2006, while VNT’s performance financial profile was slightly weaker ning than in compared to 2005, but it remained strong. Although its operating margin was negatively impacted by the increasing cost of ethylene and
The main reasons were the reduction of PVC production due to the plant shut down and the increasing ethylene cost. However, thanks to the low leverage, VNT’s cash flow protection and liquidity is satisfactory. VNT’s vinyl chloride monomer (VCM) expansion was under the commissioning and is expected to be completed in the first quarter of 2007. Hence, in 2007, VNT shwould recognize greaterly increase income from VCM sales and additional caustic soda capacity. The company plans to expand PVC capacity for by 70,000 metric tons per annum. The project cost is Bt840 million, with a scheduled and the completion is scheduled in mid 2008, said TRIS Rating. -- End
Vinythai PLC (VNT)
Company Rating: Affirmed at BBB+
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.