RAM Ratings reaffirms KL Kepong’s ratings

  • Business
  • Wednesday, 06 Aug 2014

KUALA LUMPUR: RAM Rating Services has reaffirmed the global corporate credit ratings of Kuala Lumpur Kepong Bhd (KLK) at gA3/Stable/gP2.

It said on Wednesday it also reaffirmed the national-scale ratings of KLK’s RM300mil Sukuk Ijarah CP/MTN Programme (2011/2016) and Multi-Currency IMTN Programme of up to RM1bil (or its equivalent in foreign currencies) (2012/2022) at AA1/Stable/P1 and AA1/Stable, respectively.

“The ratings reflect KLK’s position as an integrated oil-palm plantation company with a longstanding track record within the upstream and downstream segments,” it said.

RAM Ratings said KLK is the third-largest plantation company in Malaysia and among the top 10 globally, with a sizeable oil-palm planted area of 193,337 hectares (ha) as at end-March 2014.

KLK’s fresh fruit bunch yield improved to 22.51 tonnes per mature ha in FY September, 2013 (FY September 2012: 21.33 tonnes/mature ha), backed by yield recovery, particularly at its Sabah estates which were affected by biological tree stress the year before.

Along with a relatively stable oil extraction rate, its crude palm oil (CPO) yield stood at 4.8 tonnes per mature ha – comparable to that of large regional peers.

“The group’s good track record of productivity continues to reflect well on its agronomic practices. Further, KLK’s lean cost structure will tide it over CPO price downcycles.

“Despite a heavier debt load of RM2.82 billion as at end-March 2014 (end-September 2013: RM2.34bil), KLK’s balance sheet stayed strong, with a gearing ratio of 0.33 times. Coupled with its typically hefty cash pile, KLK’s net gearing ratio was low at 0.16 times,” it said. 

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