Tuesday, Oct 12, 2004
MARC has reaffirmed the rating of Tian Siang Holdings Sdn Bhd (Tian Siang)’s RM93 million nominal value coupon bearing serial bonds (Serial Bonds) at A (A flat). The reaffirmation reflects the Group’s improving profitability and consistent operational efficiency. Nevertheless, the rating is moderated by the cyclical nature of the palm oil industry largely due to potential fluctuation in CPO prices.
Tian Siang is principally involved in the cultivation of palm oil and palm oil milling. Currently, the group owns 6,046 hectares of plantation land, all of which are located in Sabah. Fresh fruit bunches (FFB) produced by these estates contributed about 60% of the total input needed by its palm oil mill in Sabah, a significant improvement compared to 50% back in 1999. In FY2003, the group recorded a FFB yield of 24.8 MT/ha (FY2002: 21.6MT/ha), substantially higher than the industry’s average of 19.0MT/ha. Besides a replanting exercise covering 356 ha due for completion at end 2004, Tian Siang does not foresee any other replanting exercise in the near future.
Currently, Tian Siang has a cumulative processing capacity of 1.66 million MT of FFB per annum. Out of the Group’s four fully operational palm oil mills, two of the mills are located in Perak and one each in Pahang and Sabah. All three mills in Peninsular Malaysia source their FFB requirements from nearby estates. Supply risk is largely mitigated by the close proximity between the mills and the surrounding estates, supported by established relationship and well laid infrastructure. In the near term, another mill will be commissioned in Cheroh, Pahang to further expand Tian Siang’s milling operation. During period under reviewed, the Group processed 981,183 MT of FFB, an increase of 31.4% year-on-year while its oil extraction rate stabilized at 19%, comparable to the industry’s average.
FY2003 witnessed another strong annual growth in the Group’s revenue and profitability, riding on the high CPO prices. The higher debt-equity ratio observed in FY2003 and FY2002 can be attributed to the adoption of new MASB Standards which resulted in changes in the accounting polices. Otherwise, Tian Siang’s debt leverage has been trending downwards since FY2001 on the back of lower borrowings and accumulated earnings. The Group’s debt servicing capacity, nevertheless, remains adequate. As a comfort to the bondholders, the current balances in the Sinking Fund Account and Commodity Reserve Account totalled RM8.0 million and RM1.9 million respectively as at August 2004, hence reflecting Tian Siang’s strong ability to meet the repayment of Tranche B of RM10 million due in October 2004.
Tian Siang is principally involved in the cultivation of palm oil and palm oil milling. Currently, the group owns 6,046 hectares of plantation land, all of which are located in Sabah. Fresh fruit bunches (FFB) produced by these estates contributed about 60% of the total input needed by its palm oil mill in Sabah, a significant improvement compared to 50% back in 1999. In FY2003, the group recorded a FFB yield of 24.8 MT/ha (FY2002: 21.6MT/ha), substantially higher than the industry’s average of 19.0MT/ha. Besides a replanting exercise covering 356 ha due for completion at end 2004, Tian Siang does not foresee any other replanting exercise in the near future.
Currently, Tian Siang has a cumulative processing capacity of 1.66 million MT of FFB per annum. Out of the Group’s four fully operational palm oil mills, two of the mills are located in Perak and one each in Pahang and Sabah. All three mills in Peninsular Malaysia source their FFB requirements from nearby estates. Supply risk is largely mitigated by the close proximity between the mills and the surrounding estates, supported by established relationship and well laid infrastructure. In the near term, another mill will be commissioned in Cheroh, Pahang to further expand Tian Siang’s milling operation. During period under reviewed, the Group processed 981,183 MT of FFB, an increase of 31.4% year-on-year while its oil extraction rate stabilized at 19%, comparable to the industry’s average.
FY2003 witnessed another strong annual growth in the Group’s revenue and profitability, riding on the high CPO prices. The higher debt-equity ratio observed in FY2003 and FY2002 can be attributed to the adoption of new MASB Standards which resulted in changes in the accounting polices. Otherwise, Tian Siang’s debt leverage has been trending downwards since FY2001 on the back of lower borrowings and accumulated earnings. The Group’s debt servicing capacity, nevertheless, remains adequate. As a comfort to the bondholders, the current balances in the Sinking Fund Account and Commodity Reserve Account totalled RM8.0 million and RM1.9 million respectively as at August 2004, hence reflecting Tian Siang’s strong ability to meet the repayment of Tranche B of RM10 million due in October 2004.