The rating action reflects the recent increase in ThaiBev’s financial leverage in relation to its acquisition of a 53.59 percent equity interest in Saigon Beer Alcohol Beverage Joint Stock Corporation (Sabeco), the largest beer producer in Vietnam with around 41 per cent market share based on volume. The acquisition was wholly funded by new borrowing. ThaiBev aims to gradually reduce the newly elevated leverage by internally generated cash over the next few years. Based on its business strengths, we expect ThaiBev will be able to significantly reduce its leverage in 34 years.
The rating continues to reflect ThaiBev’s robust competitive position in the domestic beverage market, extensive distribution network, and ongoing efforts to diversify its sources of income.
ThaiBev is the largest beverage company in Thailand. It has dominated the alcoholic beverage industry for years, with a market share exceeding 90 per cent for spirits and nearly 40 per cent for beer, based on sales volume. It is also the market leader in the readytodrink tea segment, and is a major producer of carbonated drinks and other beverages.
Moody’s Investors Service has also down graded ThaiBev issuer rating to Baa3 from Baa2, concluding the review for downgrade initiated in December 2017 following the company’s announced acquisition of the stake in Saigon Beer Alcohol Beverage Corp. The rating outlook is negative.
Published : February 04, 2018
By : The Nation