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Rating upgrade - Mustek Limited, zaBBB- long term
Mustek Limited
Registration number 1987/070161/06
Share Code: MST
ISIN: ZAE000012373
("Mustek" or "the Group")
Press release
Rating Upgrade:
Mustek Limited, zaBBB-
long term
CA-Ratings announces that it has upgraded the existing credit rating assigned to
Mustek Limited after a full interactive investigation based on the normal rating
mandate. The rating is on the national scale for South Africa, and has now been
upgraded to zaBBB- from the previous zaBB+ awarded in October 2001. It has a
stable outlook for the three-year time horizon.
The rating symbol indicates that Mustek is now viewed to be just above the cusp
termed investment grade in credit terms on the South African national scale, and
the previous pecu-lation in its ability to meet obligations has now changed to
reflect an adequate credit strength, compared to other South African obligors.
This is a very good result given the risks and pressures evident in the highly
competitive industry wherein Mustek operates, and even better considering the
progress this represents for Mustek as a business competing with international
brands.
Compared to other companies listed on the JSE Securities Exchange, Mustek has
now moved to above the median position, which means that the number of companies
with a credit strength above it, is smaller than the number of companies with a
credit strength below it. This view is based on CA-Ratings opinions on all
listed entities.
Mustek remains the first and only IT company in South Africa to be rated on a
solicited basis and to make its rating known publicly.
The assembly and manufacture of PCs still is an extremely competitive industry
not only in South Africa, but also acc-ross the world. Competitor brands like
Compaq (now merged with Hewlett-Packard) and Dell as well as smaller brands like
Fujitsu-Siemens and Packard-Bell compete head on with Mustek in South Africa,
and yet the Mecer brand has been able to achieve and retain market leadership.
This strength is ascribed partly to the commitment of owner-management and the
distribution strategy that has consistently been applied for a number of years,
but also to extremely astute procurement and tight financial controls, inter
alia on the quality of trade receivables. In the latter respect Mustek has few
equals in the broader IT industry.
Mustek keeps expanding its customer base to include entities previously closed
to it. These include departments of central and provincial government as well as
the top layer of South African corporates. Recent developments in the
competitive arena (with reference to restrictive conditions in requests for
tender, that would lead to favouring international brands vis--vis Mustek) have
seen a levelling of the playing fields in this respect, and are thus positive
for Mustek. Mustek has been faced with these odds in the past, however, and its
current position has been achieved in the face of such challenges.
Mustek is a WinTel company enjoying close relationships with Microsoft and
Intel, and is consistently able to roll out its versions of new Intel-based
machines in step with the rest of the world. Its links to the producers of
memory and other PC components in the Far East are proven, and have been a major
strength in cost-containment terms.
Issued by CA-Ratings, Johannesburg
CA-Ratings is the sole South African (and indeed African) affiliate of Standard
& Poor"s. Standard & Poor"s is the world"s largest and most respected ratings
agency, with over 135 000 ratings assigned or reviewed per year and a worldwide
presence.
CA-Ratings applies the same criteria and the same methods as does S&P although
its ratings are assigned on the South African national scale (running from zaD
to zaAAA) rather than the global scale(from D to A- for South African entities),
in order to provide greater value and usefulness to South African users.
Contact person: Charl Kocks
Tel (011) 442-4233
Fax (011) 442-4236
Pagers: (011) 780-8958 or 780-8963
Mobile: (082) 650-5836
13 May 2003
Date: 13/05/2003 05:15:14 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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