Ratch Group Public Co. Ltd.

Overview Key strengths Key risks Cash flow stability, with support from strong power purchase agreements (PPAs). Elevated leverage from acquisition appetite, growth investments, and materially higher debt tolerance. Solid market position in Thailand's power sector. Increasing exposure to debt and earnings from equity affiliates could lead to off-balance-sheet debt and a higher reliance on dividend income. Shareholder support from Electricity Generating Authority of Thailand (EGAT). Some earnings volatility from non-energy infrastructure-related investments. In our view, the company's heightened spending in the last two years indicates an increased risk appetite and a structural shift in its debt tolerance. The company still has healthy interest-servicing ability, despite its rising leverage. EBITDA interest coverage trending at 3.0x-4.0x indicates this, in contrast to similar

...Ratch Group Public Co. Ltd. will maintain high leverage over the next few years as it pursues debt-funded growth. In our view, the company's heightened spending in the last two years indicates an increased risk appetite and a structural shift in its debt tolerance. The company still has healthy interest-servicing ability, despite its rising leverage. EBITDA interest coverage trending at 3.0x-4.0x indicates this, in contrast to similar highly-leveraged peers with a ratio ranging from 1.0x to 1.5x. We believe this will preserve its credit quality as it embarks on its growth aspirations. Ratch will continue to expand its overseas renewables portfolio through the Nexif Energy group, which it acquired in the fourth quarter of 2022. We project capital expenditure (capex) of Thai baht (THB) 1.3 billion-THB5.4 billion annually for under-construction and development assets in the Nexif portfolio. Completion of these projects could bring the company's share of renewables in its portfolio to about...

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