Monday, Jul 07, 2003
MARC has reaffirmed KFC Holdings (Malaysia) Bhd’s (KFCH) corporate debt rating of A+ID (A plus, Islamic Debt). The reaffirmation reflects the Group’s above-average business and operation fundamentals and strong financials backed by a proven track record. A moderating factor to the rating is the risk profile of the food-related industry characterized by strong competition and vulnerability to economic factors.
Incorporated in 1980, KFCH is principally an investment holding company with its subsidiary companies primarily engaged in the fast food industry under the international trademark of KFC and Pizza Hut, poultry breeding and processing and a variety of food related businesses. Besides being the franchise holder of KFC for Malaysia, Brunei and Singapore and Pizza Hut for Malaysia and Singapore, KFCH is also one of Malaysia’s fully integrated food operators with its own feedmill, breeder farms, hatchery, contract broiler farms, poultry processing plants, sauce manufacturing plant, bakery, commissary, bottling plant and retail chains. KFC’s chicken requirements are supplied by the Group’s listed associate, Ayamas Food Corporation Bhd.
In 2002, KFCH completed acquisitions of several companies to expand and complement its business operations including the acquisition of 100% stake in both Kentucky Fried Chicken Management Pte Ltd and Pizza Hut Singapore Pte Ltd. This would enable the Group to fully control, operate and manage the KFC, Pizza Hut and Taco Bell outlets in Singapore. KFCH announced a major corporate restructuring scheme in December 2002 which is expected to be completed by end 2003.
With 327 KFC and 102 Pizza Hut outlets as at April 2003, KFCH is undisputedly the largest Quick Service Restaurant (QSR) franchise operator in the country. KFCH’s solid footing in the local market is attributable to its strategies of backward integration and successful expansion in both urban and rural areas ahead of its competitors. The wide restaurant network built over the years has generated the critical mass in customer traffic necessary for the Group to maintain its dominant market position. The Group also consistently introduces new products, developed by the franchisors and its in-house research & development unit, to respond to changing consumer tastes over time. High standards in marketing, finance and operations have earned it several prestigious awards over the years.
Over 95% of the Group’s revenue is contributed by its QSR and integrated poultry businesses. Reflecting the effects of improved economic conditions and consumer sentiment, the Group registered a pre-tax profit of RM98.7 million in FY2002 on the back of approximately RM1.2 billion revenue-representing a 16.5% increase in revenue from the previous year. Refinancing risk under the INIF payment structure is mitigated through the progressive reduction of the debt over the tenure of the facility. Debt leverage has increased to 1.1x (2001:0.7x) but, remains below the 2.0x cap under the INIF structure.
Barring unforeseen circumstances, KFCH is expected to sustain its growth in the short to medium term based on the Group’s expansion plans, integrated business operations and underlying high revenue derived largely from a cash business and established network of various food-related businesses throughout the country.
Incorporated in 1980, KFCH is principally an investment holding company with its subsidiary companies primarily engaged in the fast food industry under the international trademark of KFC and Pizza Hut, poultry breeding and processing and a variety of food related businesses. Besides being the franchise holder of KFC for Malaysia, Brunei and Singapore and Pizza Hut for Malaysia and Singapore, KFCH is also one of Malaysia’s fully integrated food operators with its own feedmill, breeder farms, hatchery, contract broiler farms, poultry processing plants, sauce manufacturing plant, bakery, commissary, bottling plant and retail chains. KFC’s chicken requirements are supplied by the Group’s listed associate, Ayamas Food Corporation Bhd.
In 2002, KFCH completed acquisitions of several companies to expand and complement its business operations including the acquisition of 100% stake in both Kentucky Fried Chicken Management Pte Ltd and Pizza Hut Singapore Pte Ltd. This would enable the Group to fully control, operate and manage the KFC, Pizza Hut and Taco Bell outlets in Singapore. KFCH announced a major corporate restructuring scheme in December 2002 which is expected to be completed by end 2003.
With 327 KFC and 102 Pizza Hut outlets as at April 2003, KFCH is undisputedly the largest Quick Service Restaurant (QSR) franchise operator in the country. KFCH’s solid footing in the local market is attributable to its strategies of backward integration and successful expansion in both urban and rural areas ahead of its competitors. The wide restaurant network built over the years has generated the critical mass in customer traffic necessary for the Group to maintain its dominant market position. The Group also consistently introduces new products, developed by the franchisors and its in-house research & development unit, to respond to changing consumer tastes over time. High standards in marketing, finance and operations have earned it several prestigious awards over the years.
Over 95% of the Group’s revenue is contributed by its QSR and integrated poultry businesses. Reflecting the effects of improved economic conditions and consumer sentiment, the Group registered a pre-tax profit of RM98.7 million in FY2002 on the back of approximately RM1.2 billion revenue-representing a 16.5% increase in revenue from the previous year. Refinancing risk under the INIF payment structure is mitigated through the progressive reduction of the debt over the tenure of the facility. Debt leverage has increased to 1.1x (2001:0.7x) but, remains below the 2.0x cap under the INIF structure.
Barring unforeseen circumstances, KFCH is expected to sustain its growth in the short to medium term based on the Group’s expansion plans, integrated business operations and underlying high revenue derived largely from a cash business and established network of various food-related businesses throughout the country.