RAM said the ratings reflected TNB’s entrenched position as the national utility company in Malaysia as well as its strategic importance to the country’s economic development.
The group continues to have a virtual monopoly on the transmission and distribution of electricity in peninsular Malaysia and Sabah, and remains the dominant player in the generating business, despite the growing presence of independent power producers over the past decade, RAM said in a statement.
RAM also factored in the implicit government support for TNB as well as its strong access to the capital markets, saying that it had the flexibility to refinance and repackage its existing debts.
Moderating the positive factors, however, it said TNB’s financial profile continued to be weighed down by its large debt commitments, with a total debt of RM31.4bil as at Feb 28 2003.
It said that while the level of borrowings was not unusual in the heavily capital-intensive power industry, which is characterised by a long payback period, the proper management of its large debt exposure was necessary. – Bernama
“The rating is premised on Octagon’s established position in the consumer electronics and electrical niche of the industrial paint industry. Its proven business track record since 1987 has won the confidence of major multinational companies, resulting in consistent revenue growth while maintaining a high level of profitability.
“With minimal borrowings and cash reserves of RM37.08mil as at financial year ending Oct 31, 2002, Octagon’s prudent business expansion has been driven by internally generated and shareholders’ funds,” RAM said. – AFX
The downgrade reflects the current weak and uncertain operating environment of the travel and hotel industry following the severe acute respiratory syndrome (SARs) outbreak, threat of terrorism and a weak financial performance of RPB, MARC said in a statement.
The group’s consolidated income statements recorded losses for the past two years while operational cash flow is in deficit due to high borrowing costs and heavy working capital requirements, it said. – Bernama