Fitch Ratings has assigned Singer (Sri Lanka) PLC’s (A-(lka)/Stable) senior unsecured debenture of up to Rs 1.5 billion a National Long-Term Rating of ‘A-(lka)’.
The debenture will have a tenor of three years and carry fixed coupons. It will be listed on the Colombo Stock Exchange, with proceeds to be used to refinance existing debt. The debenture is rated at the same level as Singer’s National Long-Term Rating, as it ranks equally with its other senior unsecured obligations. The final rating is the same as the expected rating assigned on 20 July 2018 and follows the receipt of documents conforming to information already received.
Recovery in Sales Volume: We expect demand for consumer durables to pick up in the medium-term as consumers adjust to higher costs, supported by an earning recovery in the agricultural sector, continued low personal taxes and stable interest rates. Singer’s consumer electronics and home appliance revenue growth slowed to 1% in 2017 on weak demand, after two years of double-digit growth, due to higher indirect taxes and a prolonged drought that affected the livelihood of a significant proportion of Sri Lanka’s population.
We believe Singer was able to better respond to the weak demand compared with peers due to its defensive product portfolio and strong brand presence. Growth in IT, Digital Media: Fitch expects Singer’s IT and mobile segments to be key growth drivers in the medium term, aided by Sri Lanka’s increasing smartphone penetration and short replacement cycles compared with most other consumer durables.
Singer is the country’s largest smartphone retailer and exclusive agent for Huawei, Sri Lanka’s second-largest smartphone brand. Singer’s IT and digital media revenue has increased at a CAGR of 57% over the past five years.
We expect it to maintain its market leadership for the next three years, with the renewal of its contract with Huawei.
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