GCR retains GIJIMA AST’s long term rating at BBB
In a rating review conducted on GIJIMA AST GROUP LIMITED (“GIJIMA AST”) in February 2010 following the release of the group’s interim results, cognisance was taken of GIJIMA AST’s exceptional operating results in the context of a depressed domestic economic environment and the resultant delays in information and communications technology (“ICT”) capital replacement/upgrade expenditure. After almost doubling in F09, revenue remained relatively flat in 1H F10. However, annualised operating profit climbed 7% to R138m, exceeding the full year F08 profit. Furthermore, the group has actively pursued margin accretion through cost-containment and efficiency initiatives; a process that has also been aided by an active shift away from low-margin product sales towards higher margin services revenue. In addition, the predictability of revenue has been increased by the growing proportion of annuity-type revenues.
Nampak downgraded to A-
GCR has downgraded Nampak Limited’s (“Nampak”) domestic ZAR long term currency rating to A- (single A minus), while the short term rating was maintained at A1- (single A one minus). Although the underlying business remained sound, the group underperformed the market over the period under review, with earnings consistently below forecasts. GCR has maintained Nampak Products commercial paper programme domestic ZAR currency short term rating at A1- (single A one minus).
Mustek ratings unchanged
GCR has maintained Mustek Limited’s (“Mustek”) domestic ZAR currency long term rating at BBB- (triple B minus) and short term rating at A3 (single A three). The computer hardware industry experienced significant pressure in 2009, as companies and government departments scaled back on IT expenditure. Accordingly, Mustek recorded revenue growth of just 2% in F09 (F08: 5% growth). Whilst operating profit rose 4% to R213m in F09, the operating margin remained relatively flat at 5%. As a means to bolster profitability, the group has focused on reducing its cost base. In this regard, management undertook to consolidate the warehousing and assembly operations to its Midrand premises, whilst centralising almost all administration functions, thus removing the duplication of such functions from its regional distribution centres.
Nelson Mandela Metro maintains ratings
GCR has maintained the Nelson Mandela Bay Metropolitan Municipality’s (“NMM”) domestic ZAR currency credit ratings at A+ (single A plus) and A1 (single A one) in the long and short term respectively. Nelson Mandela Bay has and is expected to continue to benefit from major investment opportunities being created through the Mandela Bay Development Agency, alongside its already established seaport and automotive manufacturing centre. Together, these initiatives bode well for an enhanced economic base in the medium to longer term.
Discovery Health Medical Scheme retains highest rating
Discovery Health Medical Scheme’s (“DHMS”) domestic ZAR currency claims paying ability rating of AA+ (double A plus) has been reaffirmed by GCR. This is currently the highest rating accorded to a South African medical scheme and is in line with the industry ceiling for open and closed medical schemes.
Resolution’s A- rating maintained
GCR has maintained the domestic ZAR currency claims paying ability rating of Resolution Health Medical Scheme (“Resolution”) at A- (single A minus). The rating denotes a high claims paying ability, and above average protection factors.
The Zambian commercial banking sector profitability declines to lowest level in over 10 years in 2009, with the industry facing several challenges going forward
Zambia’s commercial banking sector’s profitability as measured by both the ROaE and ROaA declined to 13.1% and 1.3% respectively for 2009. This compares to levels of over 30% and 3% prior to 2007 respectively. The sector’s performance was impacted primarily by a sharp escalation in bad debt charges, which increased from 8.5% to 18.7% of total operating income. Escalating non-performing loan (“NPL”) levels saw banks curtail lending growth in general, with total advances for the sector declining by 10%, compared to the robust growth of 48% recorded in 2008. |
