Friday, Nov 15, 2002
Malaysian Rating Corporation Berhad 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.
During the period under review, KFCH had acquired several companies to expand and complement its business operations. This includes the acquisition of 100% stake in both Kentucky Fried Chicken Management Pte Ltd and Pizza Hut Singapore Pte Ltd, which enables the Group to operate and manage the KFC, Pizza Hut and Taco Bell outlets in Singapore.
With 318 KFC and 98 Pizza Hut outlets as at September 2002, 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 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 90% 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 RM81.1 million in FY2001 on the back of approximately RM1.1 billion revenue-representing a 7.4% 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 remains manageable at below one time.
Included as part of the Group’s assets is Wisma KFC (formerly known as Wisma Idris); the legal title to which was transferred to Idris Hydraulic (M) Bhd. (Idris), which subsequently charged it to a stockbroking company. This was effected before the transaction under the original S&P agreement signed in 1996 between KFCH and Idris being completed. Idris has proposed a comprehensive debt restructuring exercise to the Corporate Debt Restructuring Committee (CDRC), which includes the retransfer of Wisma KFC’s title back to KFCH. Subsequently, KFCH entered into a conditional settlement agreement in March 2002 with Idris to resolve the issue pertaining to Wisma KFC’s title. Upon Idris shareholders’ approval and the Securities Commission’s approval, Idris will transfer the title of Wisma KFC to KFCH as legal and beneficial owner.
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.
During the period under review, KFCH had acquired several companies to expand and complement its business operations. This includes the acquisition of 100% stake in both Kentucky Fried Chicken Management Pte Ltd and Pizza Hut Singapore Pte Ltd, which enables the Group to operate and manage the KFC, Pizza Hut and Taco Bell outlets in Singapore.
With 318 KFC and 98 Pizza Hut outlets as at September 2002, 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 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 90% 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 RM81.1 million in FY2001 on the back of approximately RM1.1 billion revenue-representing a 7.4% 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 remains manageable at below one time.
Included as part of the Group’s assets is Wisma KFC (formerly known as Wisma Idris); the legal title to which was transferred to Idris Hydraulic (M) Bhd. (Idris), which subsequently charged it to a stockbroking company. This was effected before the transaction under the original S&P agreement signed in 1996 between KFCH and Idris being completed. Idris has proposed a comprehensive debt restructuring exercise to the Corporate Debt Restructuring Committee (CDRC), which includes the retransfer of Wisma KFC’s title back to KFCH. Subsequently, KFCH entered into a conditional settlement agreement in March 2002 with Idris to resolve the issue pertaining to Wisma KFC’s title. Upon Idris shareholders’ approval and the Securities Commission’s approval, Idris will transfer the title of Wisma KFC to KFCH as legal and beneficial owner.