JG Summit’s P30-B bonds retain highest rating

Local credit watchdog Philippine Rating Services Corp. (PhilRatings) has maintained its triple A rating on JG Summit Holdings Inc.'s outstanding P30-billion bond issue.

The PRS Aaa rating, the best rating level assigned by PhilRatings, suggests that JG Summit's obligations are of the highest quality with minimal credit risk and that the obligor's capacity to meet its financial commitment on the obligation is deemed extremely strong.

JG Summit is one of the country's largest and most diversified conglomerates with substantial interests in food, agro-industrial and commodities, real estate and hotel, air transportation, banking and petrochemicals.

In a statement, PhilRatings said the rating reflected JG Summit's strong liquidity, sound capitalization, the solid market position of its core businesses, and the company's experienced management team.

PhilRatings also took into account the continued positive prospects of the domestic economy, which are expected to augur well for JG Summit's core businesses.

JG Summit's liquidity remained adequate, with cash and cash equivalents of P32.5 billion, current available-for-sale (AFS) investments of P10.4 billion, and financial assets at fair value through profit or loss (FVPL) of P17.3 billion, which when combined more than covered short-term debt of P45.2 billion.

"Liquidity is expected to remain robust as operating cash will remain positive, and will be used to fund capital expenditures and loan repayments in 2015 and 2016. Reflecting the group's expansion, capex will account for the bulk of project cash outflows," PhilRatings said.

In addition to its internal cash generation, JG Summit has access to a variety of external funding sources. As of Sept. 30, last year, the group had available credit lines from several domestic and foreign banks.

"Historically, the group has also demonstrated its ability to successfully tap the debt and equity markets to generate funds," PhilRatings said.

PhilRatings noted that the holding firm's capital structure remained sound, with debt- to- equity ( DE) ratio projected to gradually taper off due to the increase in equity this year and an expected decline in debt in 2016 due to loan repayments.

Food unit Universal Robina Corp. ( URC) is one of the largest branded consumer food product companies in the Philippines, and has a growing presence in other Asian markets.

In the Philippines, URC is a dominant player, with leading market shares in savory snacks, candies and chocolates, and is a significant player in biscuits, with leading positions in cookies and pretzels. It is the largest player in the ready-to-drink (RTD) tea market, and is an important second player in both the noodles and coffee businesses.

Property subsidiary Robinsons Land Corp., meanwhile, enjoys a huge landbank, estimated at 562.88 hectares valued at around P23.8 billion as of Dec. 31 last year.

Airline unit Cebu Air is the leading low cost carrier ( LCC) in the country, accounting for 56.9 percent of the total domestic passenger market. It operates an extensive route network with 55 domestic and 35 international routes, and a total of 2,270 scheduled weekly flights.

Meanwhile, JG Summit Petrochemical Corp. is the country's largest polymer resins producer, and the only local manufacturer that produces both PP and PE in an integrated complex.