S&P summary: Hoang Anh Gia Lai Joint Stock Company

Jul 20th at 13:27

20-07-2012 13:27:09+07:00

Summary analysis -- Hoang Anh Gia Lai Joint Stock Co. ------------- 19-Jul-2012

CREDIT RATING: B-/Negative/-- Country: Vietnam

The rating on Hoang Anh Gia Lai Joint Stock Co. (HAGL) reflects the company's weak liquidity and its exposure to the economic, political, and regulatory risks of operating in Vietnam, Cambodia, and Laos.

The rating also reflects HAGL's cyclical cash flows and execution risks associated with the company's planned large capital expenditure in 2012. HAGL's favorable cost structure for property development and established brand name in Vietnam temper these weaknesses. We assess the company's business risk profile as "vulnerable" and its financial risk profile as "aggressive".

We expect HAGL's operating performance and liquidity to remain "weak", as our criteria define the term, in the next six to 12 months. Operating conditions for the company's residential property development business remain challenging even though the Vietnamese central bank lowered interest rates to stem the slowdown in economic growth.

A delay in obtaining approvals to start iron ore mining in Laos and Cambodia poses further risk to the company's business risk profile. In addition, the company's diversification into rubber plantations and hydropower projects requires significant capital expenditure and carries heightened execution risk.

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