Rating Release
Agusto & Co. hereby upgrades the rating assigned to Coleman Technical Industries Limited (“Coleman Wires & Cables”, “Coleman”, “CTIL” or “the Company”) to “A-”.
The rating expires on 27 July 2025.
Agusto & Co. hereby upgrades the rating assigned to Coleman Technical Industries Limited (“Coleman Wires & Cables”, “Coleman”, “CTIL” or “the Company”) to “A-”. The rating upgrade reflects the notable improvement in the Company’s earnings and cash flows supported in part by the sustained demand for its products as well as its growing foreign exchange earnings from its oil & gas product segment, which has helped to somewhat mitigate its foreign currency risk. This is in addition to the sustained growth in profit margins on the back of the positive impact of its procurement price hedging strategy (forward buying) and strong ability to pass on cost increases to consumers. The rating considers CTIL’s expanding electrical cable production and distribution capacities, which should sustain its market leadership status, and the prospects of local recycling of copper scraps (backward integration) that will help to build additional resilience against price and supply risks associated with imported raw materials. The rating is however constrained by sustained inventory investments, which have continued to weigh on the Company’s working capital and overall liquidity.
Coleman Technical Industries Limited is a leading cable maker and distributor in Nigeria. The Company has over 30 main products across the power, control, aerial, submersible, communication and other specialty cable categories with an extensive distribution network across Nigeria and some markets in West Africa. CTIL’s factories are located in Arepo and Sagamu in Ogun State with annual installed production capacities of 60,000 metric tons of copper and 40,000 metric tons of aluminum conductors. These factories operate at an average capacity utilization of about 65% per annum, although management expects a significant improvement in the average utilization rate as it continues to ramp up production to meet growing demand for its products. The Company is currently constructing a copper smelting plant, which is expected to come on stream in the first quarter of 2025. The Company also plans to expand its current wood drum-making capacity to support the packaging of its power cables.