News Releases 2018Meiden's Issuer Rating upgraded to BBB+ by R&I

Rating and Investment Information, Inc. (R&I) has upgraded the Issuer Rating of Meidensha Corporation (Meiden) from  BBB to BBB+.

R&I RATINGS (Aug 27, 2018)  




Issuer Rating

BBB+, Previously BBB


Rationale(from R&I's news release)

■Meiden is increasing the stability of its profits and cash flow, supported by two earnings drivers: the social infrastructure systems business and the industrial systems business. The social infrastructure systems business primarily serves the mature domestic market and also receives overseas orders relating to railways and electricity. The industrial systems business is lowering dependence on specific sectors by diversifying earnings sources to automotive testing systems, motors for electric vehicles (EVs), components for semiconductor manufacturing equipment, etc. The maintenance and servicing business and the real estate business also contribute to overall profits.

■In the social infrastructure systems market, Meiden inevitably faces competition from major players. Even so, the company secures overseas orders thanks to its proven track records of delivering products, such as railway facilities and transformers, to Asian countries and customers' trust in product quality, as well as through cooperation with local partners. With effective risk management paying off, the possibility of orders resulting in large losses is low. In the industrial systems business, several products have a top-class share of the domestic market. The business enjoys a favorable relationship with bluechip customers, though easily affected by their capital investment trends. These factors have led to an improvement in R&I's assessment of overall business risk.

■As capital accumulation and debt reduction progress with a rise in profit stability, the balance between net debt and cash flow and the ratio of net debt to equity are improving. While the company intends to make aggressive investments in overseas infrastructure projects, components for EVs, etc., such spending is expected to be kept broadly within cash flow. An erosion in the financial base is unlikely. In consideration of all the above-mentioned factors, R&I has upgraded the Issuer Rating to BBB+. The Rating Outlook is Stable.
Liquidity is adequate. R&I has therefore affirmed the CP rating of a-2.

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