Published on 15 April 2015
RAM Ratings is of the view that Sunway
Berhad’s (Sunway or the Group) acquisition of Winstar Trading Sdn Bhd
and Singapore-based PND Hardware and Trading Pte Ltd (collectively, the
acquiree companies) would have no material impact on its A2 rating,
which carries a positive outlook at present. Estimated at RM137.8
million, the transaction is immaterial relative to the scale and size of
Sunway.
Payable in 3 tranches and likely to be fully settled
by 2018, the cost of these acquisitions can be more than adequately met
by Sunway’s sizeable cash pile, which stood at RM1.98 billion as at
end-December 2014. Hence, the Group’s balance sheet strength or
debt-protection metrics are not expected to be affected by this
exercise. Additionally, we foresee some bottom line improvement for the
Group’s trading and manufacturing division, anchored by annual profit
guarantees for the acquiree companies (up to 2017) extended by their
current shareholders.
Sunway had, on 9 April 2015, entered into a share
sale agreement to purchase the entire stakes in the acquiree companies
which are in the business of trading and wholesaling of hardware,
engineering and industrial safety products in Malaysia and Singapore.
Via these acquisitions, the Group eyes cross-selling opportunities
across the customer bases of the entities, cost savings in warehousing,
and the potential to add a supply source to its property and
construction arms.
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