– New SGD 2yrs announced for China Coal Solution Pte. Ltd post successful roadshow in Singapore. Deal is strongly anchored.

– Guarantor: CCS Supply Chain Management Co., Ltd. (listed on the Shanghai Stock Exchange under the ticker code ‘600180’ with a market capitalisation of RMB10.5billion as of 31 August 2014. )

– Initial price guidance: 7.75% area


Midas 6.0 2016 at 101.15, 5.42%
Golden Agri 4.2 2017 at 100, 4.20%

Credit Highlights:

– CCS Supply Chain Management Co., Ltd. (“CCS”) is a leading coal supply chain management company in China. It provides  one-stop multi-variety and full process coal supply chain management services and coal supply chain finance services . It is the first coal supply chain management company to be listed on the Shanghai Stock Exchange under the ticker code ‘600180’ with a market capitalisation of RMB10.5billion as of 31 August 2014.

-Long established relationships with leading coal consuming companies: CCS’ clients are mainly state-owned enterprises (“SOEs”). For FY2013, about 90% of the group’s revenue were derived from SOEs, predominantly power companies. CCS has more than 10 years of relationship with the six largest state-owned power companies in China, who contributed more than 50% of the group’s FY2013 revenue.

– Well-established and stable coal procurement network: CCS has a diversified supplier base, with 49% of coal procured from overseas, and none of the suppliers accounting for more than 10% of its FY13 coal supplies.

– Prudent approach to coal procurement and price volatility management: Coal procurement is only conducted upon establishing more contracts with the end-clients, keeping speculative procurement to a minimum. The average contract tenor with clients is one year and is volume-based. The average selling price is negotiated on a monthly or quarterly basis on spot price, which allows CCS to better manage coal price fluctuation.

– Demand for supply chain management remains strong in China: Coal is the predominant source of energy for China, which is the world’s largest consumer of energy and a net import of coal, a trend which is expected to continue. The uneven geographical distribution of coal supply and demand in China necessitates the need for coal distribution and logistics.

– Strong financial performance and prudent capital management: The group’s net profit for FY2013 and 1H2014 was RMB471 million and RMB133 million respectively. As 30 June 2014, the group’s total borrowings/total assets ratio was at 0.30x.
Established company listed in 1998.

Stock Price.

ccs stock price

Healthy revenues but operating income looks a tad weak.

ccs revenues

Graph : Coal futures curve looking healthy

coal curve

A hard to evaluate credit.

My initial thoughts – shadow banking comes to Singapore. Not sure if they are involved in any trust products back home. Then again, with 16 years of operations behind them, I am sure there is little chance of their CEO and COO running away together like the Chinese shoe company listed in Frankfurt did.

The reason for this bond issue is probably because SGX is establishing itself as a serious commodity derivatives clearer, being the largest clearer for iron ore swaps.

7.75% is reasonable coupon although I have not found many comparables out there.

Then again, I trust that the arranging banks would have done their due diligence and homework on the company and gave them the all clear.