Moody's: Kingboard negative

Moody's Investors Service said it changed to negative from stable the outlook on Kingboard Chemical Holdings Ltd.'s Baa3 corporate family rating.

"The negative outlook reflects Kingboard's weaker-than-expected operating results in [the second half of 2011], and our expectation of the company's tepid profitability recovery in 2012 due to its slower pace in developing higher-margin products such as glass epoxy and high density interconnect printed circuit boards against a backdrop of sluggish global demand for electronic products in the second half," Jonathan Lee, a Moody's vice president and senior analyst, said in a statement.

Softening demand, a disruption of the electronics product supply chain by the floods in Thailand and inventory adjustments by its downstream customers have resulted in a decline in the company's EBITDA, the agency noted.

As a result, Kingboard's leverage will remain high for its rating level, with an adjusted debt-to-EBITDA ratio of 2.5x to 3.0x in the next 12 to 18 months, Lee said.

Kingboard's Baa3 rating continues to reflect its highly vertical integrated and diversified business model that partially mitigates volatilities in end-product demand, long-established presence and market position and strong position in the Chinese printed circuit board market, the agency said.

The rating is constrained by the company's aggressive expansion plans, exposures to the chemical commodity price movements, investments in China's property market, as well as the volatile electronics sector, the agency noted.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.