PT Mayora Indah gets 'A' long-term credit rating

JAKARTA (JP): Pefindo, Indonesia's only credit rating agency, has given an "A" long-term credit rating to publicly listed PT Mayora Indah and its fixed-rate Rp 300 billion (US$122.85 million) bonds which will mature in 2004.

Pefindo said the rating outlook of the company, which produces biscuits, cookies and sweets, was stable.

The rating reflected Mayora's strong position in the growing domestic biscuit and confectionery markets, supported by its diversified product mix and wide marketing and distribution network, Pefindo said.

"Mayora's dominant 20 to 25 percent market share in this very competitive fragmented industry demonstrates its ability to enter different market segments and maintain its market presence through strong brand name recognition," the company said.

The variety of product lines protects the company from loosing against fierce competition from domestic and multinational companies, it said.

The company planned to keep launching new products and expand production to sustain its market position and expand its earnings sources, it said.

Mayora's target was the mid to low range market and this gave a competitive advantage, it said.

But, competitive pressures are expected to increase and Mayora's products were easy to duplicate, it said.

Pefindo said the rating took into account Mayora's conservative financial policy.

It said its expansion over the past three years was funded mostly with equity and internally generated funds. A large cash balance had led to a very small net debt, it said.

"In fact, on Dec. 31 last year, cash and short term investments exceeded debt liabilities," it said.

It said Mayora spent less on marketing than its competitors, and might need to spend more to defend its market position. But this would not put much pressure on its profitability, it said.

Pefindo said it expected Mayora's sustainable market position to produce stable profit and favorable cash flow protection. (das)