TRIS Rating Co., Ltd. today announces that the Cabinet approval in principle to adjust maximum excise tax on alcoholic beverage does not immediately affect the ratings and outlook of Thai Beverage PLC (ThaiBev). The rating agency says currently it is too early to evaluate the full impacts of potential excise tax increase on the consumption of alcoholic drinks.
The remark is a response to the resolution passed by the Cabinet on 3 July 2007 to raise ceiling for the excise tax rate to 90% of the ex-distillery price or Bt1,000 per litre of pure alcohol, whichever is higher. The current tax ceiling is 50% or Bt400 per litre of pure alcohol for distilled liquor and 60% of the ex-refinery price or Bt100 per litre of pure alcohol for fermented alcoholic beverage. Currently, ThaiBev is charged an excise tax at 55% of ex-factory price for beer and Bt400 per litre of pure alcohol for color spirits.
However, TRIS Rating expresses concern over the newly revised Spirits Act should it become law and the Cabinet decide to raise the excise rates. Producers will likely pass on tax expense to consumers, leading to higher spirits and beer prices, which will subsequently hurt the consumption and sales volume of alcoholic drinks.
TRIS Rating adds that the actual rise in excise tax will consequently impact sales or margins of alcoholic beverage producers, like ThaiBev, and thus it will pay close attention to any government’s actions that may significantly impact ThaiBev’s financial profile.
ThaiBev, a leading producer of beer and spirits in Thailand, is currently assigned “AA-” company and guaranteed issue ratings with “stable” outlook by TRIS Rating. -- End
Thai Beverage PLC (ThaiBev)
Company Rating: Affirmed at AA-
Issue Ratings:
TBEV078A: Bt2,300 million guaranteed debentures due 2007 Affirmed at AA-
TBEV082A: Bt3,000 million guaranteed debentures due 2008 Affirmed at AA-
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 remark is a response to the resolution passed by the Cabinet on 3 July 2007 to raise ceiling for the excise tax rate to 90% of the ex-distillery price or Bt1,000 per litre of pure alcohol, whichever is higher. The current tax ceiling is 50% or Bt400 per litre of pure alcohol for distilled liquor and 60% of the ex-refinery price or Bt100 per litre of pure alcohol for fermented alcoholic beverage. Currently, ThaiBev is charged an excise tax at 55% of ex-factory price for beer and Bt400 per litre of pure alcohol for color spirits.
However, TRIS Rating expresses concern over the newly revised Spirits Act should it become law and the Cabinet decide to raise the excise rates. Producers will likely pass on tax expense to consumers, leading to higher spirits and beer prices, which will subsequently hurt the consumption and sales volume of alcoholic drinks.
TRIS Rating adds that the actual rise in excise tax will consequently impact sales or margins of alcoholic beverage producers, like ThaiBev, and thus it will pay close attention to any government’s actions that may significantly impact ThaiBev’s financial profile.
ThaiBev, a leading producer of beer and spirits in Thailand, is currently assigned “AA-” company and guaranteed issue ratings with “stable” outlook by TRIS Rating. -- End
Thai Beverage PLC (ThaiBev)
Company Rating: Affirmed at AA-
Issue Ratings:
TBEV078A: Bt2,300 million guaranteed debentures due 2007 Affirmed at AA-
TBEV082A: Bt3,000 million guaranteed debentures due 2008 Affirmed at AA-
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.