PhilRatings maintains thumbs up on San Miguel Brewery


Posted at Feb 23 2009 05:34 PM | Updated as of Feb 24 2009 01:35 AM

Local ratings agency, Philippine Rating Services Corporation (PhilRatings), maintained its rating on San Miguel Brewery Inc.'s (SMB) proposed P38.8-billion bond issue. The brewery firm increased the bond issue from P35 billion.

In a statement, PhilRatings said it maintained its rating of PRS Aaa, the highest rating, after its re-assessment of the increase of SMB's bond issue in relation to the company's revised projections. The ratings agency said the business and financial profiles of SMB continue to be extremely strong, with only minimal credit risk.

“Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligations is extremely strong,” PhilRatings said.

While some of SMB's financial ratios have slightly changed with the higher amount of the planned issue, PhilRatings said the company's measures of profitability, liquidity, and leverage remain generally strong and sound.

Initially, PhilRatings said SMB intended to apply for a P20-billion bond issue, which was eventually increased to P35 billion, then P38.8 billion. All three bond issues received a rating of PRS Aaa from the credit agency.

SMB has posted a 25.3 percent rise in net income to P10.04 billion last year from P8.02 billion in 2007. The company has sold 174.5 million cases last year, up 4 percent over the previous year, thus boosting its net sales to P48.8 billion from P44.1 billion a year earlier.

Its operating income, on the other hand, rose 27 percent to P15.6 billion from P12.3 billion the prior year.

Meanwhile, PhilRatings said they will continue to monitor developments regarding SMB, taking into account their impact on SMB's ability to service interest and principal payments on the bond issue.

Last week, Japanese firm Kirin Holdings increased its stake in San Miguel Brewery to 43 percent. San Miguel Corporation, which used to wholly own San Miguel Brewery, has reduced its stake in what used to be its crown jewel, to 50 percent.

Macquarie Research Equities previously gave the stock price of San Miguel Brewery with an "underperform" rating. It cited that the domestic beer market offers the company only few opportunities for growth.