KUALA LUMPUR: RAM Rating Services Bhd has reaffirmed the A1/P1 ratings of Road Builder (M) Sdn Bhd's (RBM) RM400 million debt notes, with a stable outlook.
It said on Monday, Dec 13, Road Builder's commercial papers/medium-term notes programme (2006/2013) (CP/MTN), with a stable outlook.
'The ratings reflect strong shareholder support and financial flexibility derived from IJM CORPORATION BHD []. Prior to IJM's acquisition of Road Builder Holdings Bhd ' which is RBM's parent -- in 2008, the company had been the main CONSTRUCTION [] arm of RBH," it said on Dec 13, 2010.
RAM Ratings after the acquisition, a substantial part of RBM's operations and human resources have been transferred to IJM's construction division.
Since RBM has retained its existing debts (including the CP/MTN), IJM has continued apportioning construction projects to the company via IJM Construction Sdn Bhd - to ensure that RBM generates sufficient cashflow to meet its financial obligations.
RBM is expected to be able to count on ready support (business and financial) from its parent and/or IJM, if needed.
In the meantime, IJM's strong business profile is underpinned by its diversified earnings base and low project-concentration risk for its construction and property divisions.
RAM Ratings since inception, the Group has established a solid reputation and sound track record within the construction industry, both locally and overseas (India and the Middle East).
Apart from having a respectable outstanding order book of RM3.61 billion as at end-June 2010, the Group's construction division continues to benefit from a relatively less lumpy order book, thus mitigating project-concentration risk.
IJM's robust financial profile is characterised by its steady earnings, healthy balance sheet and satisfactory debt-servicing ability.
In FY March 2010, the group's operating profit before depreciation, interest and tax held steady at RM694.74 million owing to the higher margins of its property, industry and infrastructure sectors, despite a 12.77% drop in revenue to RM4.01 billion (FY March 2009: RM4.60 billion).
As at end-March 2010, the group's debt level had edged up to RM3.84 billion (end-March 2009: RM3.77 billion) while its adjusted gearing ratio (excluding toll-concession-based debts) came in at a healthy 0.47 times.
At the same time, its debt-servicing ability was preserved with a funds from operations debt coverage ratio of 0.20 times.
RAM Ratings said on the other hand, IJM's credit profile remains moderated by the inherently cyclical nature of its core businesses, i.e. construction, property development, oil-palm PLANTATION []s and manufacturing, on top of the risks posed by the group's overseas expansion (i.e. the construction and property markets in India, the Middle East and Vietnam).
It said on Monday, Dec 13, Road Builder's commercial papers/medium-term notes programme (2006/2013) (CP/MTN), with a stable outlook.
'The ratings reflect strong shareholder support and financial flexibility derived from IJM CORPORATION BHD []. Prior to IJM's acquisition of Road Builder Holdings Bhd ' which is RBM's parent -- in 2008, the company had been the main CONSTRUCTION [] arm of RBH," it said on Dec 13, 2010.
RAM Ratings after the acquisition, a substantial part of RBM's operations and human resources have been transferred to IJM's construction division.
Since RBM has retained its existing debts (including the CP/MTN), IJM has continued apportioning construction projects to the company via IJM Construction Sdn Bhd - to ensure that RBM generates sufficient cashflow to meet its financial obligations.
RBM is expected to be able to count on ready support (business and financial) from its parent and/or IJM, if needed.
In the meantime, IJM's strong business profile is underpinned by its diversified earnings base and low project-concentration risk for its construction and property divisions.
RAM Ratings since inception, the Group has established a solid reputation and sound track record within the construction industry, both locally and overseas (India and the Middle East).
Apart from having a respectable outstanding order book of RM3.61 billion as at end-June 2010, the Group's construction division continues to benefit from a relatively less lumpy order book, thus mitigating project-concentration risk.
IJM's robust financial profile is characterised by its steady earnings, healthy balance sheet and satisfactory debt-servicing ability.
In FY March 2010, the group's operating profit before depreciation, interest and tax held steady at RM694.74 million owing to the higher margins of its property, industry and infrastructure sectors, despite a 12.77% drop in revenue to RM4.01 billion (FY March 2009: RM4.60 billion).
As at end-March 2010, the group's debt level had edged up to RM3.84 billion (end-March 2009: RM3.77 billion) while its adjusted gearing ratio (excluding toll-concession-based debts) came in at a healthy 0.47 times.
At the same time, its debt-servicing ability was preserved with a funds from operations debt coverage ratio of 0.20 times.
RAM Ratings said on the other hand, IJM's credit profile remains moderated by the inherently cyclical nature of its core businesses, i.e. construction, property development, oil-palm PLANTATION []s and manufacturing, on top of the risks posed by the group's overseas expansion (i.e. the construction and property markets in India, the Middle East and Vietnam).
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