LOCAL DEBT watcher Philippine Ratings Services Corp. (Philratings) maintained its PRS Aaa rating for JG Summit Holdings, Inc.’s (JGSHI) P30-billion bonds.
In a statement issued Tuesday, Philratings said the Gokongwei-led holding firm’s obligations are of the highest quality with minimal credit risk. This means that JG Summit has an “extremely strong” capacity to meet its financial commitments.
Philratings also assigned a stable outlook for the rating, which indicates this will likely be maintained in the next 12 months.
“The rating reflects JG Summit’s strong liquidity, its sound capitalization structure, the solid market position of its core businesses, and its well-experienced shareholders and management. The rating also considers the continued positive outlook for the domestic economy, which is expected to benefit the industries of JGSHI’s core businesses,” according to Philratings.
The debt watcher called JG Summit’s liquidity level healthy, with a ratio of 1.0x by end-September. The company’s cash and cash equivalents and short-term available-for-sale investments also stood at P66.4 billion, which could cover its short-term debt of P59.1 billion.
The company further has P24.5 billion worth of long-term bonds set to mature next year that will be refinanced.
“In addition to its strong internal cash generation, external liquidity is available to the Group through its credit facilities with domestic and international financial institutions. Historically, fund-raising exercises of the Group, via debt or equity, have been successful,” Philratings said.
JG Summit holds the Gokongwei group’s investments in food and beverage through Universal Robina Corp. (URC), property development through Robinsons Land Corp. (RLC), airline operations through Cebu Air, Inc., JG Summit Petrochemicals Corp., and Robinsons Bank.
URC is considered a strong market player in the country, with investments in Thailand, Vietnam, Australia, and New Zealand.
Meanwhile, Cebu Air operates low-budget carrier Cebu Pacific, which estimated its market share at 53% in the second quarter of 2018, compared to Philippine Airlines’ 29% and Air Asia’s 16%.
Philratings further described RLC as the second largest mall operator in the country with 49 malls covering a gross leasable area of 1.4 million square meters.
The listed conglomerate booked an attributable profit of P14.80 billion in the first nine months of 2018, 30% lower year-on-year as the weakness of the peso weighed on its petrochemicals, food, and airline units.
Revenues meanwhile went up by seven percent to P217.52 billion.
“Going forward, the JG Summit Group is expected to benefit from the country’s consumption-driven economy, while its diversified portfolio of businesses mitigates risks due to market volatility and rapid industry changes,” Philratings said.
Shares in JG Summit rose 0.31% or 15 centavos to close at P48.15 each at the stock exchange on Tuesday. — Arra B. Francia
