TCC Group Holdings Co. Ltd. Assigned 'BBB-' Issuer Credit Rating; Outlook Stable from S&P, One of the Big Three Global Credit Rating Agencies

S&P Global Ratings, one of the big three global credit rating agencies, has recently assigned TCC Group Holdings an investment grade credit rating of BBB- with a Stable outlook. This follows a similar rating given by Fitch Ratings in December 2023, making it the second international credit rating agency to award TCC with a BBB- credit rating. The S&P rating reflects TCC's stable financial condition, potential for earnings growth, and reduced dependence on the China market.

The S&P report highlighted that TCC Group Holdings generated EBITDA of new Taiwan dollar (NT$) 17.4 billion in 2023, generating more stable and likely stronger profitability from its overall cement business. Consolidation of two overseas units, Cimpor and OYAK, will help stabilize the EBITDA of the cement business and reduce dependence on the China market.The report mentioned that relatively stable profitability from operations in Taiwan, Portugal, and Turkey should support the profitability of the TCC's overall cement operations.S&P also forecasts that TCC's cement business will generate NT$15 billion-NT$16 billion in operating profits in 2024 and NT$17 billion-NT$18 billion in 2025.Additionally, the report noted that TCC's growing renewable energy generation and lithium battery production are expected to enhance the overall EBITDA growth in 2024-2025, reflecting TCC's successful strategy of continuous expansion and diversification to improve financial stability. TCC possesses exceptional liquidity, with cash and short-term investments totaling NT$136 billion at the end of March, plus cash flow from operations, sufficient to cover upcoming 24-month maturities and capital expenditures.

The S&P report also mentioned that equity financing and tighter working capital management significantly reduced TCC's debt in 2023. Coupled with rapid EBITDA growth, this will support higher capital expenditures (capex) for global expansion in 2024-2025. This is expected to maintain TCC's debt-to-EBITDA ratio below three times, with a stable rating outlook.