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Fitch Ratings Awards TCC a BBB- Rating, Signaling Strong Market Position and Growth Prospects

TCC's investment in renewable energy and low-carbon technology boosts its global competitiveness
Taiwan
t 1101.TW Mid and Small Cap 2000
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Fitch Ratings, a leader in global capital market credit assessments, has assigned Taiwan Cement Corporation (TCC) a first-time rating of BBB- with a “Stable” outlook for its long-term unguaranteed U.S. dollar bonds. This significant milestone marks TCC’s entry into the international investment-grade credit echelon, enhancing its negotiating power in offshore wind power purchases without the need for bank or government guarantees.

The credit rating, reflecting TCC’s dominance in the cement markets of Taiwan, Turkey, Portugal, and key regions in China, underscores the company’s stable profitability and cash flow, primarily through its subsidiary, Heping Electric Power. Additionally, TCC’s moderate to medium liability levels further solidify its financial standing.

Fitch’s report highlights TCC’s strategic investments in energy conservation and carbon reduction, particularly in China’s cement industry. These efforts are poised to bolster TCC’s competitiveness amidst tightening carbon emission standards and looming carbon fees.

TCC’s foray into renewable energy, notably through its European subsidiary NHOA Energy, is paying dividends. The company’s involvement in global energy storage and construction (EPC) business, along with positive EBITDA cash flow projections from TCC Energy Storage, illustrates a successful diversification strategy.

Further accentuating TCC’s growth trajectory is its recent move to increase holdings in European low-carbon cement companies. This expansion into markets led by Turkey’s OYAK Cement and Portugal’s Cimpor, both known for robust market shares and profitability, is set to enhance TCC’s international market footprint.

Fitch’s assessment indicates that the combined EBITDA contributions from OYAK Cement and Cimpor, along with anticipated future cash flows, are expected to offset acquisition costs. This strategic alignment is likely to result in a moderate improvement in TCC’s leverage, bolstering its long-term financial health and market positioning.

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