Betagro's credit rating upgraded to reflect robust capital structure,
continuous growth potential
published : 24 Jan 2023 at 16:14
Bangkok, 18 January 2023 – Betagro PCL (BTG), Thailand's world-class branded food company, has its corporate and unsubordinated debenture ratings elevated to 'A' with a 'stable' outlook.
The upgrade, from 'A-' previously assigned by the TRIS Rating, Thailand's leading credit rating agency, mirrors greater confidence in BTG's strong fundamentals, business potential and growth opportunities.
This is a result of a much stronger capital structure of the company following the successful Initial Public Offering (IPO) and listing on the Stock Exchange of Thailand, coupled with strengthening operating results, Vasit Taepaisitphongse, Chief Executive Officer and President of BTG, pointed out.
TRIS Rating's viewpoint is that BTG has been one of the leading agro-industrial and food businesses in Thailand for more than 55 years and being able to sustain such stature with an integrated business model covering animal feed, processed meat and food products.
The company can therefore effectively control the quality and cost of production.
Meanwhile, its strategy focussing on value-added products and selling products under the company's brand which are diverse and well known by consumers has resulted in increased profitability and mitigating the impact of commodity price volatility.
BTG is expected to continue to perform well for many years to come by benefiting from high meat prices due to supply shortages and rising demand following a recovery in the tourism sector and concerns over global food security.
Furthermore, BTG has a much stronger capital structure after raising funds of about 17 billion baht from the offering of newly issued ordinary shares through an IPO.
The company plans to use about half of that amount to repay existing debt and the other half for business expansion and working capital.
As of the end of September 2022, the firm's debt to earnings before interest, taxes, depreciation and amortisation (EBITDA) ratio was 2.2 times, a significant drop from 5.6 times at the end of 2021.
So that means the increased capital base and capital expenditures by about 3-5 billion baht per year.
The debt to EBITDA ratio is expected to be 1.5 times in 2022 and 2.5-3.9 times in 2023-2024, while the debt to total capitalisation ratio of the company will stay at a level below 50% during 2022 and 2024.
Mr Vasit said: “Given a higher credit rating reinforces the confidence in BTG's potential for stable and sustainable growth, as well as the ability to generate good returns in the long term for our investors and shareholders.
"The 'A' credit rating with 'stable' outlook is classified by the security circle as an investment grade with a high degree of trust.
"Therefore, it has a positive effect on the financial cost of the company in terms of future funds raising through the debenture market when interest rates are still on the rise, as well as helping to increase competitiveness and improve operating results in the future.”