Credit rating downside may occur if RATCH’s financial leverage increases dramatically due to any large scale, debt-funded acquisitions.
RATCH is a power holding company focusing on investment in power and related businesses. The company was established in 2000 to purchase the Ratchaburi power plant from EGAT. RATCH was listed on the Stock Exchange of Thailand (SET) in 2000. EGAT is RATCH's major shareholder, holding a 45% stake. As of March 2015, RATCH's total power portfolio was 6,578 megawatts (MW). About 5,613 MW is in operation while the rest (965 MW) is in the development and construction phases. RATCH was the largest power generator in Thailand with a capacity of 5,014 MW connected to the Thai power grid, representing 14% of the nation’s total installed capacity.
RATCH’s business profile is very strong. The reliable streams of cash flow stem from the power purchase agreements RATCH has with EGAT and the Provincial Electricity Authority (PEA). In addition, RATCH’s project management and operating experience keep its projects on schedule and ensure each project is operating smoothly and producing cash flows as planned. As of March 2015, about 4,964 MW or 88.4% of RATCH’s operating capacity was secured by power purchase agreement (PPAs) with EGAT, 29 MW covered by PPAs with PEA, and the rest or 620 MW was mostly covered by PPAs with the industrial customers both in Thailand and abroad. In terms of plant type, about 94% of RATCH’s generating capacity is from gas-fired power plants, 4% from hydropower plants, and 2% from renewable resources.
RATCH’s financial profile is satisfactory. The company’s earnings before interest, tax, depreciation and amortization (EBITDA) increased from Bt11,252 million in 2013 to Bt12,823 million in 2014. The increase was due to the better performance of Ratchaburi Electricity Generating Co., Ltd. (RATCHGEN) – rated “AAA” by TRIS Rating, as well as the consolidation of Tri Energy Co., Ltd. (TECO), and higher contributions from Ratchaburi Power Co., Ltd. (RPCL) and renewable energy projects. RATCH’s EBITDA is expected to increase over Bt13,000 million in 2015, due to the start-up of the Hongsa power project in the second half of 2015. The Hongsa power project will add 751 MW of new generating capacity to RATCH by 2016. At the end of 2014, RATCH's capital structure was above average. The total debt to capitalization ratio improved from 27.5% at the end of 2013 to 26.7% at the end of 2014.RATCH's liquidity is very strong. Cash on hand and short-term investments totaled Bt14,266 million at the end of 2014. The company’s total debt was Bt22,298 million. Its debt repayment is well-managed with only Bt721 million due in 2015 and Bt1,200 million in 2016. RATCH has committed capital expenditures of Bt13,800 million during 2015-2017, largely for the Hongsa and the Xe-Pian Xe-Namnoy power projects in the Lao PDR. However, RATCH has planned to increase its capacity to 9,700 MW by 2023. With this plan, RATCH may spend about Bt20,000 million for new investments and acquisitions during 2015-2017. RATCH may need to raise more debt to fund its investment plan. However, the debt to capitalization ratio is not expected to rise above 40% during 2015-2017.
Ratchaburi Electricity Generating Holding PLC (RATCH)
Company Rating: AAA
Rating Outlook: Stable