CA-Ratings announces that it has affirmed 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 SA, and has been affirmed at zaBBB-. It has a stable outlook for the three-year time horizon.
The rating symbol indicates that Mustek is still viewed to be just above the cusp termed investment grade in credit terms on the South African national scale, and its ability to meet obligations reflects 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 continued progress this represents for Mustek as a business competing with international brands.
Compared to other companies listed on the JSE Securities Exchange, Mustek is 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 SA to be rated on a solicited basis and to make its rating known publicly.
The assembly and manufacture of PCs is still an extremely competitive industry not only in SA, but also across the world. Competitor brands like Hewlett-Packard and Dell as well as smaller brands like Fujitsu-Siemens compete head on with Mustek in SA, 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. Developments in the competitive arena (with reference to restrictive conditions in requests for tender, that would lead to favouring international brands vis-`a-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.
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CA-Ratings is the sole South African-held credit ratings agency. It has been operating in the South African and southern African markets since 1993, and is unashamedly committed to Africa.
CA-Ratings applies the same criteria and the same methods, as does the largest ratings agency in the world. Its ratings are assigned either on the South African national scale (running from zaD to zaAAA) or on the international scale (from D to AAA). The rating of Mustek has been requested on the national scale, which provides maximum value and usefulness to South African users since it offers the clearest differentiation against other South African issuers and corporate entities.
The rating assigned to Mustek fully complies with the regulations to the CISCA Act, No 45 of 2002 (as do all ratings issued by CA-Ratings). CA-Ratings is a ratings agency approved under that Act. This means that investors falling under the Collective Investment Schemes Control Act (such as unit trusts) may invest in debt instruments issued by Mustek to a maximum extent of 10% of that investor`s portfolio if the debt is not a money market instrument, and to a maximum of 5% if the debt is a money market instrument.
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