KUALA LUMPUR: Malaysian national oil company, Petroliam Nasional Bhd (Petronas) is among the region’s top 10 cash holders, which collectively held US$532 billion (US$1-RM4.54) or 40 per cent of the total Asian cash balance at end-2022.
Petronas has been accorded A2 rating with a stable outlook, according to Moody’s Investors Service.
Besides Petronas, the other nine companies comprised seven from China and one each from South Korea and Taiwan.
"Three major Chinese national oil companies - China Petrochemical Corporation (Sinopec Group, A1 stable), China National Petroleum Corporation (CNPC, A1 stable), and China National Offshore Oil Corporation (CNOOC, A1 stable) - as well as Petronas (A2 stable), are the only four oil and gas (O&G)-based companies in the top 10 cash holders.
"Together, they held 86 per cent of the O&G sector's cash balance at the end of 2022. These companies maintain high cash balances through the O&G price cycle which reflects their strong liquidity and prudent financial policies,” Moody’s said in a statement.
The international credit rating company said a high cash balance provides a buffer against industry cyclicality and allows a company to act quickly on potential acquisition opportunities.
Moody’s said the technology, media and telecommunications (TMT), O&G, and property sectors dominate the region's cash pile.
"TMT companies hold a quarter of the cash pile, helped by strong cash flow generation. O&G companies ranked second in cash holdings, supported by elevated energy prices. The property sector ranked third despite a contraction in cash holdings in 2022.”
Overall, Moody’s said the cash holdings of rated non-financial companies in Asia (excluding Japan) will hold steady at around US$1.3 trillion in the next 12-18 months, as investment-grade companies, which account for most of the cash holdings, maintain their significant cash positions.
Moody’s report examined the cash holdings of 214 non-financial companies in Asia (excluding Japan) as of June 30, 2023.
It said cash continues to bear an important role in supporting a company's liquidity and is vital for operational needs, corporate solvency and the ability to pay off short-term liabilities as they come due.
Furthermore, ample cash allows a company to seize investment opportunities as they arise and acts as a buffer against unexpected expenses or downturns in a business. - Bernama