The rating affirmation reflects its diversified business portfolio, strong operating record, the improvement in palm oil prices and the fairly stringent requirements under the issue structure, according to Malaysian Rating Corp Bhd (MARC).
These factors are, however, moderated by the cyclical development affecting plantation and timber businesses and the group's exposure on its investments in various venture capital activities, MARC said.
In the near term, the group's plantation sector will directly benefit from the strengthening of palm oil market fundamentals and the favourable crude palm oil prices, which had risen to RM1,500 from the average of RM895 recorded in 2001, MARC said.
It expects the timber extraction or plantation land-clearing contract in Kalimantan to generate substantial long-term revenue whilst higher palm oil prices should contribute positively towards the group's bottom line in the intermediate term. – Bernama
The ratings reflected the bank’s sound credit risk management, which had translated into an asset quality that was superior to many of its rated peers, the local rating agency said.
As at June 30, 2002, UOBM’s gross non-performing loan (NPL) ratio (3-month classification policy) stood at 10.44%, a slight improvement from 10.76% recorded as at Feb 2, 2002, when all the assets and liabilities of Overseas Union Bank (Malaysia) Bhd (OUBM) were legally transferred to UOBM.
RAM expects UOBM’s asset quality to at least be maintained at its current level, if not improve, with the bank’s sound credit risk management and the gradual economic recovery.
After managing all the major issues related to its acquisition of OUBM, the enlarged UOBM was now well-poised to reap the advantages of the merger, it added.
The bank would have the opportunity to reinforce its already-strong niche and also its business relationships with small and medium-sized enterprises, thus allowing it to further expand its business and improve its profitability.
For the first 10 months of the financial year ended Dec 31, 2002, the bank achieved a pre-tax profit of RM337.85mil despite incurring one-off merger-related expenses. – Bernama
As such, the enhanced ratings of A2(s) and P1(s) for the NIP, which was issued on Jan 28, 1997, were no longer applicable, the local rating agency said.
The NIP comprised three tranches, namely RM350mil fixed-rate bonds 1997/2002, RM300mil floating rate notes 1997/2004 (FRNs) and RM200mil commercial papers 1997/2004 (CP).
RAM said that the bonds were fully redeemed upon the maturity date on Jan 28, 2002, with funds from its corporate guarantor, Malayan Cement Bhd (MCB).
Following the MCB group’s refinancing exercise, the FRNs were fully redeemed on July 26, 2002, while the CP was cancelled on Jan 24, 2003, it said. – Bernama
In a statement, RAM noted that the Murabahah commercial papers and medium-term notes (MCP/MMTN), which would fall due in 2010, would be backed by a corporate guarantee from Nestle Malaysia, the parent of Nestle Foods, and therefore, the ratings were based on the credit risk profile of Nestle Malaysia as a group.
The agency also said the ratings reflected the Nestle group’s dominant position in the packaged food and beverage market, its diverse product portfolio and strong branding.
“We expect Nestle Malaysia’s operating cashflow to be resilient against economic cycles and the volatility in raw material prices. Nevertheless, the group may need to refinance a portion of the proposed MCP/MMTN, due to its practice of paying out generous dividends. Despite this, we believe that it will not be at the expense of the timely servicing of Nestle Malaysia’s debt obligations,” RAM added. – Bernama
Serudong is an independent power producer which owns, operates and maintains a 36 MW diesel-fuelled power plant in Tawau, Sabah.
RAM said that during the period under review, the plant performed within the operating requirements stipulated under the power purchase agreement (PPA) and was able to claim full capacity payments and fully pass fuel costs to Sabah Electricity Sdn Bhd (SESB). The company has maintained plant availability at levels exceeding the required minimum of 87% and operated within the allowable net heat rate of 9,111 kJ/kWh. – Bernama
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