FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka


Submit PostSubmit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post



EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

CHRONICLE™ NEWS PRODUCTS

FINANCIAL CHRONICLE™

Views & Reviews, Analysis, Evaluations, Discussions, Gossip and Hot Tips relating to Sri Lankan companies listed on the Colombo Stock Exchange (CSE)
Contribute




DAILY CHRONICLE™

Latest news and articles published in Newspapers, Websites, Blogs and other online news sites relating to business and investments in Sri Lanka
Contribute



ECONOMIC CHRONICLE™

This is a section that provide news, views, analysis, predications relating to Political and Socio-Economic factors and how such activities affect the Stock Market and other economic activity of the Country.

Contribute




EXPERT CHRONICLE™

This is an exclusive section for Expert Articles which will help member to share knowledge through comments and responses of the members. All members are allowed to reply and make comments to these articles.

Contribute


Submit Post


CHRONICLE™ YouTube

Youtube Videos and other visual presentations relating Stock market and other investment advise submitted by members or other contributors.

Contribute


Submit Post


කොළඔ කොටස් වෙළඳපොළේ වංශකථාව
කොළඔ කොටස් වෙළඳපොළේ ලැයිස්තුගත සමාගම් කොටස් ගැන තොරතුරු¸විශ්ලේෂණ¸සාකච්ඡා¸ කටකතා¸රසකතා යන සියල්ල අපේම සිංහලෙන් කතා කළ හැකි ‘කතා මණ්ඩපය’

Contribute

Twitter Feeds
POPULAR COMPANIES
A

ABANS ELECTRICALS PLC

ACCESS ENGINEERING PLC Hot

ACL CABLES PLC

ACL PLASTICS PLC

ACME PRINTING & PACKAGING PLC

AGSTAR PLC

AITKEN SPENCE HOTEL HOLDINGS PLC

AITKEN SPENCE PLC

ANILANA HOTELS AND PROPERTIES PLC

ARPICO INSURANCE PLC

ASIA ASSET FINANCE PLC

ASIA CAPITAL PLC

B

BAIRAHA FARMS PLC

BALANGODA PLANTATIONS PLC

BIMPUTH FINANCE PLC

BLUE DIAMONDS JEWELLERY WORLDWIDE PLC

B P P L HOLDINGS PLC

BROWNS BEACH HOTELS PLC

BROWNS INVESTMENTS PLC

C

CARGO BOAT DEVELOPMENT COMPANY PLC

CENTRAL INDUSTRIES PLC

CEYLON COLD STORES PLC

CEYLON GRAIN ELEVATORS PLC Hot

CEYLON TEA BROKERS PLC

CEYLON TOBACCO COMPANY PLC

CHEVRON LUBRICANTS LANKA PLC

COLOMBO FORT LAND & BUILDING PLC

COMMERCIAL BANK OF CEYLON PLC

CITRUS LEISURE PLC Hot

COMMERCIAL CREDIT AND FINANCE PLC

D

DANKOTUWA PORCELAIN PLC

DFCC BANK PLC

DIALOG AXIATA PLC

DIALOG FINANCE PLC

DIPPED PRODUCTS PLC

DISTILLERIES COMPANY OF SRI LANKA PLC

DUNAMIS CAPITAL PLC

E

EAST WEST PROPERTIES PLC Hot

EASTERN MERCHANTS PLC

EXPOLANKA HOLDINGS PLC

E-CHANNELLING PLC

F

FIRST CAPITAL HOLDINGS PLC

G

GALADARI HOTELS (LANKA) PLC

GUARDIAN CAPITAL PARTNERS PLC

H

HATTON NATIONAL BANK PLC

HAYLEYS PLC

HAYLEYS FABRIC PLC

HAYLEYS FIBRE PLC Hot

HEMAS HOLDINGS PLC

HIKKADUWA BEACH RESORT PLC

HNB ASSURANCE PLC

HVA FOODS PLC

J

JANASHAKTHI INSURANCE COMPANY PLC

JOHN KEELLS HOLDINGS PLC Hot

JOHN KEELLS HOTELS PLC

L

LANKA ASHOK LEYLAND PLC

LANKA IOC PLC

LANKEM CEYLON PLC

LANKEM DEVELOPMENTS PLC

LAUGFS GAS PLC

LAUGFS POWER LIMITED

LOLC FINANCE PLC

LOLC HOLDINGS PLC

LUCKY LANKA MILK PROCESSING COMPANY PLC

M

MELSTACORP PLC

N

NATIONAL DEVELOPMENT BANK PLC

NATION LANKA FINANCE PLC

NESTLE LANKA PLC

O

ORIENT FINANCE PLC

OVERSEAS REALTY (CEYLON) PLC

P

PANASIAN POWER PLC

PEOPLE'S LEASING & FINANCE PLC

PIRAMAL GLASS CEYLON PLC

PRIME FINANCE PLC

R

RAIGAM WAYAMBA SALTERNS PLC

RENUKA AGRI FOODS PLC

RENUKA CAPITAL PLC

RENUKA HOLDINGS PLC

RICHARD PIERIS AND COMPANY PLC

RICHARD PIERIS EXPORTS PLC Hot

ROYAL CERAMICS PLC

S

SAMPATH BANK PLC

SEYLAN BANK PLC

SIERRA CABLES PLC

SINGHE HOSPITALS PLC Hot

SMB LEASING PLC

SOFTLOGIC HOLDINGS PLC

SOFTLOGIC LIFE INSURANCE PLC

SRI LANKA TELECOM PLC

SWISSTEK (CEYLON) PLC Hot

T

TEEJAY LANKA PLC

TESS AGRO PLC

THREE ACRE FARMS PLC

TOKYO CEMENT COMPANY (LANKA) PLC Hot

U

UNION BANK OF COLOMBO PLC

V

VALLIBEL FINANCE PLC

VALLIBEL ONE PLC Hot

VALLIBEL POWER ERATHNA PLC

W

WASKADUWA BEACH RESORT PLC


You are not connected. Please login or register

FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Sri Lanka Lankem 'A-' rating confirmed: RAM

Sri Lanka Lankem 'A-' rating confirmed: RAM

Go down  Message [Page 1 of 1]

CSE.SAS

CSE.SAS
Global Moderator
RAM Ratings Lanka said it had confirmed an 'A-' rating on Lankem Ceylon Plc, with a 'stable' outlook. Its short-term 'P2' rating was also confirmed.

"The ratings are supported by its diversity in business operations, dominant market positions in most of its business lines, the resilient demand for agrochemicals, and above average debt-protection metrics," RAM Ratings said in a statement.

"However the ratings are pressured by its exposure to the volatility in the plantation segment and its vulnerability to fluctuations in raw material prices as well as the below-average liquidity profile."

The full statement is reproduced below:

RAM Ratings Lanka reaffirms Lankem Ceylon PLC’s A-/P2 ratings

RAM Ratings Lanka has reaffirmed Lankem Ceylon PLC’s (“Lankem” or “the Company”) long- and short-term corporate credit ratings of A- and P2 respectively. The outlook on the long-term rating is stable.

The ratings are supported by its diversity in business operations, dominant market positions in most of its business lines, the resilient demand for agrochemicals, and aboveaverage debt-protection metrics. However the ratings are pressured by its exposure to the volatility in the plantation segment and its vulnerability to fluctuations in raw material prices as well as the below-average liquidity profile.

Lankem and its subsidiaries are collectively referred to as “the Group”. Lankem, through its subsidiaries, is mainly engaged in the manufacture and distribution of agrochemicals as well as the cultivation of tea and rubber, with a presence in the consumer goods and paints sectors. Its other business ventures include interests in hotels, agriculture, construction and trade. The diversity has enabled the Group to better withstand downturns in a particular sector, as weaker showing in one sector can be offset by the better performance in another.

The ratings are upheld by the Group’s good market position in its key business lines. Lankem is one of the top 3 players in the agrochemicals industry. Furthermore, Lankem is also among the top 3 players in the paint industry while controlling 60% of the thinner market owing to its exclusive dealership agreements and distribution fleet.

Elsewhere, Lankem is a major player in the bitumen industry aided by its established brand name and distribution network. Meanwhile, the ratings are also upheld by the resilient demand for agrochemicals. Lankem’s agrochemicals division has been one of the main contributors to the Group’s revenue and profits; its revenue is largely derived from its herbicides, which are a crucial input in paddy cultivation. Since rice is the country’s staple food, the demand for herbicides is anticipated to remain relatively resilient.

We note that the Group’s performance deteriorated significantly in fiscal 2012, in line with a drop in revenue of its plantation segment and sluggish sales growth in chemicals and hardware; as such, its operating profit before interest and tax (“OPBDIT”) contracted 34.99% year-on-year (“y-o-y”). This coupled with heavier borrowings, resulted in its funds from operations debt coverage (“FFODC”) halving to 0.25 times as at 31 FYE March 2012 (“end-FY Mar 2012”); lower than RAM Rating Lanka’s expectations.

Although Lankem’s debt protection metrics are still opined to be above average, the deterioration is viewed with concern. Moving ahead, the Group’s FFODC ratio is envisaged to hover around 0.20 times, in line with its rising borrowings; any further weakening of its financial profile beyond our expectations is likely to result in a negative rating action.

Meanwhile, the ratings continued to be weighed down by its exposure to vagaries in the plantation sector. The plantation segment is the largest contributor to Lankem’s earnings, accounting for more than 50% of its pre-tax profit in recent years. Lankem’s performance is highly susceptible to the vagaries of the plantation sector such as weather conditions, cost pressures (particularly wages), rising energy costs and varying fertiliser prices. In fiscal 2012, the segment’s performance deteriorated owing to adverse weather conditions and an increase in plantation sector wages.

Furthermore, the Group is exposed to the volatilities in raw material prices. The Group has been able to pass on cost increases to its customers owing to its good market positions in its major businesses. That said its margins could be pressured should its ability to pass on cost increases to its customers on a full and timely basis be affected amid keen competition.

Lankem’s liquidity position is deemed below-average in line with its increased dependency on short-term borrowings and relatively low cash reserves. As at end-June 2012, the Group had cash reserves of LKR 1.47 billion, compared to LKR 5.26 billion of short-term borrowings which made up around 66% of its entire borrowings. However, we derive comfort from its unutilised funding lines amounted to more than LKR 1 billion.

http://www.lbo.lk/fullstory.php?nid=649547489

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum