Fitch affirms Vanachai bonds

Fitch Ratings said it affirmed the BBB+(tha) national long-term rating on Thailand-based Vanachai Group PLC's secured debentures due 2008, which are secured by assets of Vanachai Group's wholly owned subsidiary, Vanachai Panel Industries Company Ltd.

The agency said Vanachai Group's creditworthiness is based on its well-established domestic market position, its high level of production integration via the production of glue and its forward expansion into value-added products, which helps support margins. The ratings are also supported by the strong industry outlook, which is driven by growing local and regional consumer demand for wood-based panels.

Nonetheless, Fitch noted that Vanachai Group faces continued margin pressure from rising raw materials and in-land transportation costs from higher rubber wood and oil prices over the past three years. The company's EBITDAR margins declined to 26% in 2005 from 35% in 2004. EBITDAR margin further declined to 23% in the first half of 2006, although it has been improving on a quarterly basis thanks to the trend of rising particle board prices seen since the beginning of 2006, the agency said. The company's net debt to last-12-months EBITDAR increased to 3.4 times at June 30 from 2.8 times in 2005 and 2.0 times in 2004.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.