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14.06.2007
Bond issue by Podillya assigned uaA+ provisional rating
Credit-Rating, a nationally-recognized credit rating agency in Ukraine has today announced the assignment of the uaA+ (uaA plus) provisional long-term credit rating to UAH100m 3-year issue of registered coupon collateralized bonds (A series) by Vinnitsa Oblast-based Grocery Company Podillya CJSC (Issuer or company). The primary companys activity is growing the cereals, industrial and other crops, wholesale sugar, grain, and fodder trade, producing the fodder. In the course of analysis Credit-Rating used Issuers financial statements for 2004-2006, as well as other inside information furnished by the company.
The uaA issuer rating reflects strong obligors capacity to pay its obligations in the Ukrainian financial market environment, it may, though, be more vulnerable to adverse changes in economic, financial and business conditions than obligors rated uaAA and uaAAA.
The plus (+) or minus (-) modifier denotes ratings relative status within major categories .
Factors maintaining the credit rating
- Growth in Issuers key performance indicators through 2005-2006, specifically the companys assets have grown to UAH316.5m from UAH5.2m, the net sales have grown to UAH358.2m according to 2006 totals (UAH140.6m in 2005), the net profit have grown to UAH83m (UAH45.6m in 2005).
- High Issuers profitability, specifically the sales profitability amounted to 23%, the ROA amounted to 26%.
- The Issuers undistributed profit of UAH128.7m 29% exceeds the planned issue size of UAH100m.
- The planned bond issue is underwritten by Roshen Confection Corporation, which is the biggest Ukrainian producer of confectionery taking 22.5% of the market. The 2005-2006 net sales of the corporation amounted to UAH1.9bn and 2.2bn, with the net profit being UAH80.1m and UAH188.8m respectively, with the undistributed profit amounting to UAH264.7m as of Dec. 31, 2006.
- The Issuer conducts the full spectrum of agricultural works on beet, cereals and technical crops growing, with the Issuers agricultural land under long-term lease amounting to 40K hectares.
- Issuers major income source is sugar trade (75% of net sales), with the 2006 production volumes amounted to 61.8K metric tons, having allowed the Issuer to achieve a 2.4% market share.
- Companys effective management, considering high proficiency of management and operative personnel to be of great importance; alongside with the modernization and extension of production facilities.
Factors constraining the credit rating
- Growing competition on sugar market entailed by surplus in production facilities in Ukraine, exposing the threat of sugar overproduction and excessive supply.
- The Issuers activity is seasonable depending on crop yield and weather and climate conditions, as well as on state support.
Information on all the credit ratings assigned in accordance with the Ukrainian national scale may be found in the REUTERS, BLOOMBERG and FTN MONITOR information systems.
For further information, please contact:
Information and analytic department
Sergey Rozumyak +38 044 490 25 50
SRozumyak@credit-rating.com.ua
