Fitch Ratings has affirmed Singer (Sri Lanka) PLC’s (Singer) National Long-Term Rating at ‘A-(lka)’. The Outlook is Stable. A full list of rating actions is at the end of this commentary.
Singer’s rating is supported by our expectations that the company will be able to weather weakening demand because of its strong market leadership, extensive product and brand portfolio across different price points and well-managed hire purchase (HP) business, which makes consumer durables more affordable during a downturn. We believe Singer will maintain leverage at levels commensurate with its current rating level despite debt-funded acquisitions and continued expansion.
We expect demand for consumer durables to be sluggish in the next six-12 months due to tightening of monetary and fiscal policies by the government. The government has increased the value-added tax and the central bank has raised benchmark interest rates.
The depreciating Sri Lanka rupee also raises the cost of imported goods, which make up the majority of products sold by retailers.
However, we believe long-term fundamentals driving demand, including a continued rise in per capita income and a growing middle class, are intact.
Fitch expects operating challenges to be mitigated by Singer’s strong market leadership, which is supported by a wide retail presence, its portfolio of well-known brands and extensive local manufacturing capabilities compared with peers.
Singer’s rating is supported by our expectations that the company will be able to weather weakening demand because of its strong market leadership, extensive product and brand portfolio across different price points and well-managed hire purchase (HP) business, which makes consumer durables more affordable during a downturn. We believe Singer will maintain leverage at levels commensurate with its current rating level despite debt-funded acquisitions and continued expansion.
We expect demand for consumer durables to be sluggish in the next six-12 months due to tightening of monetary and fiscal policies by the government. The government has increased the value-added tax and the central bank has raised benchmark interest rates.
The depreciating Sri Lanka rupee also raises the cost of imported goods, which make up the majority of products sold by retailers.
However, we believe long-term fundamentals driving demand, including a continued rise in per capita income and a growing middle class, are intact.
Fitch expects operating challenges to be mitigated by Singer’s strong market leadership, which is supported by a wide retail presence, its portfolio of well-known brands and extensive local manufacturing capabilities compared with peers.
www.dailynews.lk
No comments:
Post a Comment