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RATIONALE
Credit Rating Agency of Bangladesh Limited (CRAB) has assigned AA3 (Pronounced as Double A Three) rating in the long term to C. P. Bangladesh Co. Limited. CRAB has also assigned AA3 (Lr) rating to BDT 438.00 million aggregate long term outstanding as well as assigned ST-2 rating to BDT 10,732.0 million aggregate funded and non funded working capital limit in the short term of the Company. The ratings of CPBL considered strong market position in its related industry, capacity building and sound business performance during last three years, strong asset base and equity position while also taking into account of cyclical nature of the poultry industry and local feed market, current leverage position of the Company. However, CRAB observed recent improvement in the financial matrix of the Company and found that its coverage position has been improved in 2012 compared to previous year. CPBL is a concern of Thailand based Charoean Pokphand (CP) Group which has more than 200 companies in around 20 countries around the world. CP group is mainly concentrated in Agribusiness, retail business and telecommunication. The primary operation of CPBL in Bangladesh is poultry farming, manufacturing of poultry feed and production of broiler and layer chicks. CPBL has established Feed mills, Hatcheries, Breeder Farms and
PROFILE
C. P. Bangladesh Co. Limited (hereinafter referred as CPBL or The Company) has been incorporated in 1999 as a Private Limited Company and engaged in producing poultry and animal feed, eggs and DOC and also imports and trades vaccines, processed food etc. The Company is a subsidiary of CP Group, Thailand. As per the latest management provided information on 30 June 2012, CPBL reported half-yearly revenue of BDT 6,582.0 million and Net profit after tax of BDT 873.0 million.
Broiler
Farms
in
Bangladesh.
The
fully
integrated
operations in Bangladesh operated by CPBL includes raw material sourcing for animal feed production and distribution, animal breeding and farming, process foods etc. Existing and new facilities in diversified location strengthen CPBLs distribution channel and operaion in Bangladesh as well as give CPBL scale of economies. Among the raw materials for feed, Corn occupies approximately 50%-60% of the requirement and the price is quite volatile, but price movement in the international market affects the cost structure of CPBL.
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Moreover pandemics, such as Avian Influenza may have a severe effect on the revenue of the Company; however, diversified revenue mix can buffer such impact to some extent. CPBLs revenue marked a CAGR (2007-2011) of 30%, mostly driven by strong growth in feed mill and DOC business. The revenue growth of CPBL slowed down in 2011 and CPBLs raw material purchase attributed 55%-60% of its revenue. However, in 2011, it increased to 74% which resulted in increase in CoGS and decrease in gross profit margin and thus resulted in a sharp nosedive in profitability margin in 2011. But in 2012 the Company regained its profitability position and reported Net profit of BDT 873.0 million (1H 2012). Though the return from the feed segment is cyclical, CPBLs revenue is strongly concentrated in the feed business as 60% revenue comes from such segment where 89% of feed business revenue was generated from poultry feed segment and rest of the revenue comes from fish and other feed segments. Apart from the poultry business, revenue generation from selling of DOC also attributed 23% in 2011 whereas Commercial Egg sale through different buyers as well as super shops also attributed 8% of revenue of CPBL in 2011 compared to 3.1% in 2010. The Company also observed working capital pressure due to the nature of high inventory level which should be maintained to buffer production and stock. Increase in avg. inventory processing period in 2011 resulted weak liquidity indicators in 2011 compared to previous years. The Company injected BDT 500.00 million paid up capital in 2011 from the share money deposit it carried from 2009; however, borrowed fund outstanding in 2011 increased by 2.8x from 2010 as expressed by its borrowed fund/shareholders equity ratio was 1.56x in 2011 (2010: 0.58x) and borrowed fund/EBITDA ratio of 6.47x (2010: 1.06x). Such increment in the leverage position heightened its financial expenses and throttled its coverage position below 2.0x in 2011.
* Not e: CRAB a ppends numerical modifi ers 1, 2, a nd 3 to each generic rating classification from AA through CCC . The modifi er 1 i ndi cates t hat the obligation ranks in the hi gher end of
its generic rating category; the modifi er 2 i ndi cates a mid-range ranking; and the modifier 3 indicat es a ranking i n the l ow er end of that generic rating cat egory.
* Not e: CRAB a ppends numerical modifi ers 1, 2, a nd 3 to each generic rating classification from AA through CCC . The modifi er 1 i ndi cates t hat the obligation ranks in the hi gher end of
its generic rating category; the modifi er 2 i ndi cates a mid-range ranking; and the modifier 3 indicat es a ranking i n the l ow er end of that generic rating cat egory.
Copyright 2012, CREDIT RATING AGENCY OF BANGLADESH LIMITED ("CRAB"). All rights reserv ed. ALL INFORMATION CONTAINED HER EIN IS PR OTECT ED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITT ED, TRANSFER RED, DISSEMINAT ED, REDIST RIBUTED OR RESOLD, OR STORED FOR SUBSEQU ENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT CRABS PRIOR WRITTEN CONSENT. All information contained herein is obtain ed by CRAB from sources believ ed by it to be accurate and reliab le. Becaus e of the possibility of human or mech anic al error as well as other factors, however, such information is prov ided as is without w arranty of any kind and CRAB, in particular, makes no rep res ent ation or warranty, express or imp lied, as to the accuracy, timelin ess, comp let enes s, merch ant ability or fitnes s for any particular purp ose of any such info rmation. Under no circu mst anc es shall CRAB have any liability to any person or entit y for (a) any loss or damag e in whole or in part cau sed by, result ing from, or relatin g to, any error (negligent or otherwise) or other circumstanc e or conting ency with in or outside th e control of CRAB or any of its directors, officers, e mploy ees or agents in conn ection w ith the procurement, collec tion, comp ilat ion, analysis, int erp ret ation, communication, publicat ion or d eliv ery of any such information, or (b) any direct, ind irect, special, cons equent ial, co mpen satory or inc ident al d amages what soev er (including w ithout limitatio n, lost profits), even if CRAB is advised in advanc e of the possibility of such damag es, result ing from the use of or inability to use, any such information. The cred it ratings and fin ancial report ing analysis obs erv ations, if any, constituting part of the informat ion contain ed herein are, and must be constru ed solely as, statement s of opinion and not statements of fact or recommendat ions to purchas e, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLET ENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFOR MATION IS GIVEN OR MADE BY CRAB IN ANY FORM OR MANNER WHATSOEVER. Each rating or oth er opin ion mu st be w eigh ed solely as on e factor in any investment decision made by o r on beh alf of an y user of the info rmation cont ain ed herein, and each such us er must ac cordin gly make its own study and ev aluat ion of each securit y and of each issu er and gu aranto r of, and each provider of credit support for, each s ecurit y that it may consid er purch asing, holding or sellin g.
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