BANPU Ratings Affirmed at “A+” with Confidence & Positive Cash Flow
The credit rating and the rating of its existing senior unsecured debentures for energy leader Banpu Public Company Limited (BANPU) have been confirmed at “A+” with a “Stable” outlook, according to leading rating agency TRIS, as of December 2015. The ratings reinforce Banpu’s prominent position in the Asia-Pacific region with strong fundamentals, solid liquidity, successful operating cost-cutting and capital spending measures paired with a variety of high-quality products and a diverse customer base. The ratings also take into consideration Banpu’s 2016 plan to list its power subsidiary, Banpu Power Public Company Limited (BPP) on the Stock Exchange of Thailand (SET).
Ms. Somruedee Chaimongkol, CEO of Banpu Public Company Limited said, “Over the years, Banpu’s performance has remained resilient in the face of the commodity price cycles and economic uncertainties. Our focus has been on cash flow management, cost reduction, productivity improvement, and new product development for better margins. These measures have been accomplished by our people in all the countries that we operate in with tangible results. Thus, it reflects Banpu’s readiness to step into our next phase of growth with strategic focus and resilience to overcome challenges.”
The rating highlighted Banpu’s efforts to stabilize its cash flow. As of September 2015, Banpu has US$ 510 million cash on hand. The company also reduced its capital spending and investment to US$554 million for its upcoming five-year plan during 2016-2020, compared with US$717 million spent during 2012-2015. The expenditures are limited to committed expenditures, essential activities, and investments in the power business. The operating cash flow will be strengthened by lower fuel cost, continued cost saving efforts, and contribution from the Hongsa project.
Additionally, Banpu is in the process of listing its power subsidiary, Banpu Power, or “BPP”, on the SET in 2016. BPP is currently invested in operations and projects across Asia with equity capacity for Banpu of 2.3GW by 2018. The IPO of BPP will raise capital for the next phase of growth for its power business as well as generating proceeds back to Banpu PLC from shareholder loan repayment. Furthermore, according to TRIS’s assessment, the successful listing of BPP will enhance Banpu’s liquidity, improve capital structure, and reduce financial leverage.
As a prominent Asian energy company with coal and power generation businesses in China, Australia, Mongolia, Thailand, Lao PDR, Indonesia, Singapore, and Japan, Banpu is also increasing its investment in renewables as well as advanced coal-fired technology power stations to strike a balance with existing operations. The company will maintain its focus on logistics synergies, marketing synergies, and added-value strategies, such as developing premium products to meet customer demand.
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Banpu is a coal-mining and power generation group with a presence in eight countries across the Asia-Pacific region: Thailand, Lao PDR, Indonesia, Singapore, Australia, China, Mongolia and Japan.