TRIS upgrades TPIPL rating to A- and outlook to stable

TRIS has upgraded the TPIPL’s rating to A- from BBB+ and its outlook from positive to stable. The upcoming THB5.0 billion refinancing debenture – open for subscription in March - has been assigned A- credit rating. With the TPIPL credit rating upgrade the rating on TPI Polene Power (TPIPP) outstanding unsecured debentures has also been upgraded to A-/stable while the stand alone credit rating profile (SACP) is been maintained at ‘a”. The rating upgrade recognizes TPIPL’s impressive operating results with its revenues and EBITDA rising sequentially in the last three years reaching THB50.4 billion and THB13.2 billion, respectively, in 2022.
 

Rising EBITDA margins thanks to competitive moats evolving from innovations

Both revenue and EBITDA hit new highs in 2022, and EBITDA has been rising to a range of 25-30% for the past three years comparing favorably from the 10-20% range seen in the previous years. With the steady climb in EBITDA, its net debt to EBITDA has fallen to 4.5x in 2022, well below the historical levels of above 6 times. The increased profitability emanates mainly from TPIPL’s relentless pursuit on innovations; such as the strategy to focus on specialty chemicals, significantly boosting the profit margins of its polymer business. In addition, the company’s continuing efforts to cut costs and improve production efficiency have enhanced the performances of the construction material business. Link to TRIS rating here: TPIPL and TPIPP. 
 

Sustainable EBITDA and falling leverage 

The competitiveness moat that evolved from product and processes innovations continues to allow TPIPL to deliver resilient margins especially relative to closest peers. The high HVA specialty polymers, HVA construction material products and solutions are expected to tap the more dynamic niche in product demand such as EVA for solar panel encapsulants, hotmelts for cables & adhesives, construction materials with high thermal control properties. As for renewable power the continued drive towards higher intake of municipal solid waste will not only yield cost benefits but carbon credits as well that can be monetized the moment the carbon market opens for Thailand. We are now in the middle of the roll out of our medium-term plan to become fossil-free power producer by 2025/2026. 

Finances stronger 

Capex outlay for 2023/2024 is THB7.0/4.0 billion, front loaded in the current year to fund the ongoing medium term cost efficiency and plant improvement programs as well as planned capacity increases in renewable power: solar (61MW), wind (5MW) and MSW (19MW). Our current capex plan will not disrupt the falling momentum in our leverage (net debt/EBITDA), the strengthening debt servicing ability (EBITDA/interest) and our objective to generate shareholder value. In addition, the one-notch upgrade in our credit rating, will allow us keep a tight lid on the funding costs of our debenture refinancing. For more company details please refer to the Opportunity Day Presentation Materials of TPIPL and TPIPP at our websites: www.tpipolene.co.th and www.tpipolenepower.co.th