Thursday, Oct 09, 2003
MARC has reaffirmed the rating of Tian Siang Holdings Sdn Bhd’s (Tian Siang) RM93 million Nominal Value Coupon Bearing Serial Bonds (2001/2009) at A (Single A). The rating reaffirmation is based upon the group’s strong financial performance in FY2002 stemming largely from the recovery in crude palm oil prices. However, the rating is moderated by the group’s exposure to the inherent volatility of commodity prices.
Tian Siang Holdings Sdn Bhd is primarily involved in palm oil milling. Currently, the group owns 6,058 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. In FY2002, the group recorded a drop in the average FFB yield from 22.74MT/ha to 21.57MT/ha, albeit substantially higher than the industry’s average of 17.95MT/ha. The drop in the average yield was attributed to the lower production by a number of its estates. In the near future, MARC does not foresee any massive replanting exercise to take place since only a small percentage of the estates are covered by old palm oil trees.
Last year the group expanded its processing capacity to 1.44 million MT per annum following the full operation of its latest mill in Pahang. The group currently has four fully operational palm oil mills. Two of the mills are located in Perak and one each in Pahang and Sabah, respectively. All three mills in Peninsular Malaysia source their FFB requirements from nearby estates. In 2002, the group’s oil extraction rate improved from 18.8% in FY2001 to 19.2% in FY2002. This was, however, still marginally lower than the overall industry average of 19.9%. This was mainly attributed to the quality of FFB bought from outside estates’ and smallholders’ crop.
FY2002 saw a significant growth in the group’s profitability underlined by the improvement in crude palm oil prices. The group posted a record revenue of RM221.3 million, an increase of more than 80% from that in FY2001. The higher crude palm oil prices also led to improved operating profit margin of 7.5% in fiscal 2002. The group’s debt servicing capacity remained adequate despite a slight drop from the previous year, mainly due to the higher FFB cost for its milling operations. Tian Siang Holdings Sdn Bhd’s capital structure improved during the period under review from 0.64 times in FY2001 to 0.58 times in FY2002 due to the growing shareholders’ funds.
Tian Siang Holdings Sdn Bhd is primarily involved in palm oil milling. Currently, the group owns 6,058 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. In FY2002, the group recorded a drop in the average FFB yield from 22.74MT/ha to 21.57MT/ha, albeit substantially higher than the industry’s average of 17.95MT/ha. The drop in the average yield was attributed to the lower production by a number of its estates. In the near future, MARC does not foresee any massive replanting exercise to take place since only a small percentage of the estates are covered by old palm oil trees.
Last year the group expanded its processing capacity to 1.44 million MT per annum following the full operation of its latest mill in Pahang. The group currently has four fully operational palm oil mills. Two of the mills are located in Perak and one each in Pahang and Sabah, respectively. All three mills in Peninsular Malaysia source their FFB requirements from nearby estates. In 2002, the group’s oil extraction rate improved from 18.8% in FY2001 to 19.2% in FY2002. This was, however, still marginally lower than the overall industry average of 19.9%. This was mainly attributed to the quality of FFB bought from outside estates’ and smallholders’ crop.
FY2002 saw a significant growth in the group’s profitability underlined by the improvement in crude palm oil prices. The group posted a record revenue of RM221.3 million, an increase of more than 80% from that in FY2001. The higher crude palm oil prices also led to improved operating profit margin of 7.5% in fiscal 2002. The group’s debt servicing capacity remained adequate despite a slight drop from the previous year, mainly due to the higher FFB cost for its milling operations. Tian Siang Holdings Sdn Bhd’s capital structure improved during the period under review from 0.64 times in FY2001 to 0.58 times in FY2002 due to the growing shareholders’ funds.