Wednesday, Feb 25, 2004
MARC has upgraded Kuala Sidim Berhad’s (KSB) RM50 Million Guaranteed Commercial Papers / Medium-Term Notes (Tranche 1) to MARC-1(bg) / A(bg) (A flat) and RM50 Million Commercial Papers / Medium-Term Notes (Tranche 2) to MARC-2 / A- (A minus). KSB’s rating upgrades for Tranche 1 reflect the unconditional and irrevocable guarantee provided by Southern Bank Berhad (SBB) while that of Tranche 2 reflect the company’s overall improved performance during the fiscal year under review. Vulnerability to the cyclical nature of the palm oil industry remains as a moderating factor.
The KSB Group is involved in the cultivation and processing of palm oil, natural rubber, bulking of edible oil and agriculture research and advisory services. On 29 August 2003, KSB was delisted from the Kuala Lumpur Stock Exchange (KLSE), following a move by its holding company, Boustead Holdings Berhad, to take it private.
Palm oil continues to be the Group’s primary plantation crop, accounting for 99% or 73,227ha of the total cultivated area, while the remaining 1% comprises rubber, coconut and forest plantation/teak. In fiscal year 2002, KSB’s yield per mature hectare experienced a decline from 18.5MT/ha to 16.6 MT/ha, reflecting its overall plantations maturity profile. Immature and young trees accounted for 52% of its plantations. OER improved from 19.8% in 2001 to 20.3% in 2002, as compared to the country’s average of 19.22%. Based on its small hectarage of old mature palms, MARC does not foresee any massive replanting exercise over the duration of the bond issues.
Going forward, given the increasing mature areas coupled with prevailing favourable CPO prices, MARC expects both KSB’s revenue and profitability to register further improvement. In fiscal year 2002, KSB reported an increase of 56% and 70% on its revenue and pre-tax profit respectively.
The Group has eight mills operating in its estates, with a maximum capacity of 310MT/hour. These mills, especially the more recently constructed, have been recording good extraction rates which are higher than the industry’s average. In anticipation of higher FFB production from increasing palm maturity, KSB plans to build another three mills; one each in Sabah, Sarawak and Indonesia, with a capacity of between 20 to 45 MT/hour.
KSB’s overall gearing ratio has been manageable over the last five years. Drawdown of the MTN in FY2002 was utilized for mill construction, plantation development and capital expenditure. The Group’s retained profit had risen to RM785 million from RM761million previously. Meanwhile, advances to holding company fell from RM392 million as at end FY2002 to RM302 million at the end of the third quarter FY2003.
The KSB Group is involved in the cultivation and processing of palm oil, natural rubber, bulking of edible oil and agriculture research and advisory services. On 29 August 2003, KSB was delisted from the Kuala Lumpur Stock Exchange (KLSE), following a move by its holding company, Boustead Holdings Berhad, to take it private.
Palm oil continues to be the Group’s primary plantation crop, accounting for 99% or 73,227ha of the total cultivated area, while the remaining 1% comprises rubber, coconut and forest plantation/teak. In fiscal year 2002, KSB’s yield per mature hectare experienced a decline from 18.5MT/ha to 16.6 MT/ha, reflecting its overall plantations maturity profile. Immature and young trees accounted for 52% of its plantations. OER improved from 19.8% in 2001 to 20.3% in 2002, as compared to the country’s average of 19.22%. Based on its small hectarage of old mature palms, MARC does not foresee any massive replanting exercise over the duration of the bond issues.
Going forward, given the increasing mature areas coupled with prevailing favourable CPO prices, MARC expects both KSB’s revenue and profitability to register further improvement. In fiscal year 2002, KSB reported an increase of 56% and 70% on its revenue and pre-tax profit respectively.
The Group has eight mills operating in its estates, with a maximum capacity of 310MT/hour. These mills, especially the more recently constructed, have been recording good extraction rates which are higher than the industry’s average. In anticipation of higher FFB production from increasing palm maturity, KSB plans to build another three mills; one each in Sabah, Sarawak and Indonesia, with a capacity of between 20 to 45 MT/hour.
KSB’s overall gearing ratio has been manageable over the last five years. Drawdown of the MTN in FY2002 was utilized for mill construction, plantation development and capital expenditure. The Group’s retained profit had risen to RM785 million from RM761million previously. Meanwhile, advances to holding company fell from RM392 million as at end FY2002 to RM302 million at the end of the third quarter FY2003.