Monday, November 21, 2011

RAM Ratings assigns AAA rating to Mydin group's RM350m debt notes

KUALA LUMPUR (Nov 21): RAM Ratings has assigned a final enhanced rating of AAA(fg) to Mydin Mohamed Holdings Bhd's proposed RM350 million Danajamin Nasional Bhd-guaranteed Islamic debt notes.

The ratings agency said on Monday the long-term rating of the Islamic medium-term notes (IMTN) programme (2011/2024) has a stable outlook.

'The enhanced rating reflects the irrevocable and unconditional financial guarantee from Danajamin (rated AAA/stable/P1), which enhances the credit profile of the proposed IMTN beyond Mydin's stand-alone credit risk,' it said.

RAM Ratings pointed out that while Mydin's current financial profile is healthy, its balance sheet and credit metrics are expected to deteriorate.

To recap, Mydin has widespread presence throughout Peninsular Malaysia via its 88 outlets (as of July 2011).

The group plans to open 13 hypermarkets over the medium term, or two to three new hypermarkets a year between FY March 2013 and FY March 2017.

The ratings agency said this contrasts against its track record of only four hypermarkets in five years, and entails considerable execution risk and also makes demands on its management resources.

'To fund its ambitious expansion plan, the group's debt burden is projected to balloon from RM87.10 million as at end-March 2011 to RM471.60 million in FYE 31 March 2012 (FY March 2012), continuing to rise to about RM550 million to RM650 million in the next two years,' it said.

RAM Ratings said Mydin's gearing ratio is envisaged to stay above 1.0 time over the next three years while its operating profit before depreciation, interest and tax (OPBDIT) debt coverage ratio and operating cashflow debt coverage ratio are expected to be somewhat weak at around 0.1 times.

No comments:

Post a Comment