China Mobile Ltd., Samsung Electronics Co. and Hutchison Whampoa Ltd. are among Asia’s most “cash rich” companies, helping put the region ahead of the U.S. when it comes to expansion opportunities, Moody’s Investors Service said.
Rated Asian non-financial companies in emerging markets outside of Australia and Japan have cash reserves of about $230 billion, compared with almost $1 trillion in the U.S., according to a report today from Moody’s. Some 120 companies were surveyed in Asia versus about 1,200 in the U.S.
In Asia “the average amount per corporate is almost double that of the U.S. companies,” said Moody’s Senior Credit Officer Elizabeth Allen. Excluding China Mobile, whose cash-to-debt ratio is over 400 percent, “the average balance per corporate of $1.5 billion is higher than the average per corporate in the U.S.”
Asia is leading the world’s economic recovery and will keep attracting capital because interest rates in the U.S. and other advanced nations will stay low, the International Monetary Fund said last month. Such cash buildup means Asian companies are better placed to support future growth, Moody’s said.
“From the end of 2008 to mid 2010, cash holdings rose substantially, by almost 60 percent, mainly on improved operating performance and additional debt raising,” Allen said. “These cash holdings will support further expansion and could serve as an acquisitions war chest.”
China Mobile, rated Aa3, the fourth-highest investment grade, has maintained a net cash positive position for at least five years while Hutchison Whampoa’s cash holdings averaged about $15 billion over the same period, the report said.
Companies such as Korean steelmaker Posco and Hyundai Motor Co. are using reserves to make acquisitions. “Many other companies are in growth phases and will use the cash for their capital expenditures,” Allen wrote.
Rounding out the top 10 cash rich companies are Hyundai Motor, CNOOC Ltd., Reliance Industries Ltd., Posco, Genting Bhd., LG Electronics Inc. and Jardine Strategic Holdings Ltd.