TRIS Rating Co., Ltd. has affirmed the company rating of Saha Pathana Inter-Holding PLC (SPI) at “A+” with “stable” outlook. The rating reflects SPI’s diversified investments, the experience and demonstrated capability of its management team, and the leading positions in its core businesses: instant noodles, garments, and cosmetics. The rating also takes into consideration SPI’s conservative investment policy and strong financial profile. However, these strengths are partially offset by the intense competition in the consumer products and food industries and Saha Group’s complex shareholding structure.
The “stable” outlook reflects the stability of both the business and financial profiles of SPI. Dividend income from its diverse holdings may fluctuate in short term, but will continue to generate stable cash flow for the company in the medium to long term.
TRIS Rating reported that SPI was established in 1972 and is now the main holding company of Saha Group. The company is responsible for initiating and investing in new businesses, providing debt and guarantees to support affiliates, facilitating industrial parks and infrastructure, and providing other services. At the end of March 2007, investments spanned 170 companies in several industries. The diversity of these investments mitigates the concentration risk where any individual business would be affected by economic cyclicality. The company normally owns less than 50% of each company, while the rest is mainly owned by the strategic partners or other companies in the Saha Group. The combined ownership of SPI and affiliated firms is sufficient to control the operations of the companies in which it has invested.
The management teams of the Saha Group’s core businesses are capable, and with policy guidance from SPI’s competent management team, Saha Group companies have been able to maintain leading positions in various markets. Saha Group is able to sustain its competitive advantage through branding, as shown in the garment, cosmetics and instant noodle businesses. Well-respected brand names and unique know-how are important to maintain competitiveness. The vertical and horizontal integration of the Group is another key to success. Group companies have significant market shares in intimate apparel, cosmetics, and instant noodles. However, the very competitive nature of these industries challenges the Group to innovate continuously and to control costs to sustain profitability.
TRIS Rating said, SPI’s financial profile has continuously improved in recent years. Total debt (including guarantees to related companies) as a percentage of capitalization improved from 19.2% in 2004 to 13.2% in 2006 and stood at a very strong level of 13.5% at the end of March 2007. The improvement was a result of increased retained earnings and significantly lower guarantees to affiliates. A policy to continuously reduce guarantees to affiliates has greatly reduced SPI’s risk exposure. Guaranteed obligations declined from Bt331 million in 2004 to Bt236 million in 2005, Bt96 million in 2006, and Bt96 million at the end of March 2007. SPI’s ability to generate cash hinges on Saha Group’s performance, and has remained strong since the 1997 economic crisis. SPI’s funds from operations (FFO) interest coverage ratio was 5.5 times in 2003, rising to 6.8 times in 2004, 7.9 times in 2005, and at 7.7 times in 2006.
TRIS Rating also said that as a result of the cross-shareholding policy among Saha Group companies, some investors have difficulty analyzing the Group. However, all transactions among SPI and companies in the Saha Group conform to the regulations of the Stock Exchange of Thailand (SET) and Securities and Exchange Commission (SEC). -- End
Saha Pathana Inter-Holding PLC (SPI)
Company Rating: Affirmed at A+
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 stability of both the business and financial profiles of SPI. Dividend income from its diverse holdings may fluctuate in short term, but will continue to generate stable cash flow for the company in the medium to long term.
TRIS Rating reported that SPI was established in 1972 and is now the main holding company of Saha Group. The company is responsible for initiating and investing in new businesses, providing debt and guarantees to support affiliates, facilitating industrial parks and infrastructure, and providing other services. At the end of March 2007, investments spanned 170 companies in several industries. The diversity of these investments mitigates the concentration risk where any individual business would be affected by economic cyclicality. The company normally owns less than 50% of each company, while the rest is mainly owned by the strategic partners or other companies in the Saha Group. The combined ownership of SPI and affiliated firms is sufficient to control the operations of the companies in which it has invested.
The management teams of the Saha Group’s core businesses are capable, and with policy guidance from SPI’s competent management team, Saha Group companies have been able to maintain leading positions in various markets. Saha Group is able to sustain its competitive advantage through branding, as shown in the garment, cosmetics and instant noodle businesses. Well-respected brand names and unique know-how are important to maintain competitiveness. The vertical and horizontal integration of the Group is another key to success. Group companies have significant market shares in intimate apparel, cosmetics, and instant noodles. However, the very competitive nature of these industries challenges the Group to innovate continuously and to control costs to sustain profitability.
TRIS Rating said, SPI’s financial profile has continuously improved in recent years. Total debt (including guarantees to related companies) as a percentage of capitalization improved from 19.2% in 2004 to 13.2% in 2006 and stood at a very strong level of 13.5% at the end of March 2007. The improvement was a result of increased retained earnings and significantly lower guarantees to affiliates. A policy to continuously reduce guarantees to affiliates has greatly reduced SPI’s risk exposure. Guaranteed obligations declined from Bt331 million in 2004 to Bt236 million in 2005, Bt96 million in 2006, and Bt96 million at the end of March 2007. SPI’s ability to generate cash hinges on Saha Group’s performance, and has remained strong since the 1997 economic crisis. SPI’s funds from operations (FFO) interest coverage ratio was 5.5 times in 2003, rising to 6.8 times in 2004, 7.9 times in 2005, and at 7.7 times in 2006.
TRIS Rating also said that as a result of the cross-shareholding policy among Saha Group companies, some investors have difficulty analyzing the Group. However, all transactions among SPI and companies in the Saha Group conform to the regulations of the Stock Exchange of Thailand (SET) and Securities and Exchange Commission (SEC). -- End
Saha Pathana Inter-Holding PLC (SPI)
Company Rating: Affirmed at A+
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.