Wednesday, Feb 18, 2004
The ratings assigned reflect Premium Nutrients Group’s competitive position as an integrated producer of specialty fats; and the structural features in the issue structure. The rating, however, is moderated by the Group’s thin operating profit margin, limiting its ability to leverage on its balance sheet.
A KLSE Second-Board listed entity, Premium Nutrients Group is principally involved in the processing of palm oil fresh fruit bunches into crude palm oil and palm kernel into processed commodity products (non-specialty fats) and converting the processed commodity products into specialty fats. Sales of non-specialty fats and specialty fats contributed equally towards total revenue; with slightly more than half of total revenue derived from export sales.
The Group’s products are mainly targeted at the recession resilient food industry; with the principal users being confectionary manufacturers, chocolate manufacturers, non-dairy creamer manufacturers, biscuit manufacturers, animal feed formulators, ice cream producers and snack food makers. Demand for specialty fats are expected to be sustainable; bearing a close correlation to population growth and affluence.
Besides its ability to cater to the specific needs of its customers, the Group has established a reputation for reliability in producing quality products; facilitated by the integrated nature of its operations and strong R & D capability. The Group’s plants are located in Pasir Gudang (Johor), Kulai (Johor) and Kakinada (India). The Group’s overseas markets are serviced by its established network of agents.
Premium Nutrients Group’s operating profit margin is thin; averaging 3.4% over the past five fiscal years. The amount of debt obligations that can be assumed by the Group is thus limited. The Group’s debt leverage as at end June 2003 was moderate at 0.57 times. Noteholders’ interests are protected under the issue structure through the cap of 1.25 times on the Group’s debt leverage. Liquidity risk is mitigated through the priority ranking accorded to payment obligations under the MUNIF/IMTN facility in the payment waterfall and maintenance of a liquidity buffer equivalent to one six-month profit payment of outstanding primary IMTNs.
A KLSE Second-Board listed entity, Premium Nutrients Group is principally involved in the processing of palm oil fresh fruit bunches into crude palm oil and palm kernel into processed commodity products (non-specialty fats) and converting the processed commodity products into specialty fats. Sales of non-specialty fats and specialty fats contributed equally towards total revenue; with slightly more than half of total revenue derived from export sales.
The Group’s products are mainly targeted at the recession resilient food industry; with the principal users being confectionary manufacturers, chocolate manufacturers, non-dairy creamer manufacturers, biscuit manufacturers, animal feed formulators, ice cream producers and snack food makers. Demand for specialty fats are expected to be sustainable; bearing a close correlation to population growth and affluence.
Besides its ability to cater to the specific needs of its customers, the Group has established a reputation for reliability in producing quality products; facilitated by the integrated nature of its operations and strong R & D capability. The Group’s plants are located in Pasir Gudang (Johor), Kulai (Johor) and Kakinada (India). The Group’s overseas markets are serviced by its established network of agents.
Premium Nutrients Group’s operating profit margin is thin; averaging 3.4% over the past five fiscal years. The amount of debt obligations that can be assumed by the Group is thus limited. The Group’s debt leverage as at end June 2003 was moderate at 0.57 times. Noteholders’ interests are protected under the issue structure through the cap of 1.25 times on the Group’s debt leverage. Liquidity risk is mitigated through the priority ranking accorded to payment obligations under the MUNIF/IMTN facility in the payment waterfall and maintenance of a liquidity buffer equivalent to one six-month profit payment of outstanding primary IMTNs.