FW: MARC ASSIGNS PRELIMINARY RATING OF AAAIS(fg) TO MASTEEL’S RM130.0 MILLION GUARANTEED SUKUK IJARAH PROGRAMME

 

 

 

P R E S S  A N N O U N C E M E N T

 

FOR IMMEDIATE RELEASE

 

MARC ASSIGnS PRELIMINARY RATING OF AAA_IS(fg) TO MASTEEL'S RM130.0 MILLION GUARANTEED SUKUK IJARAH PROGRAMME

 

MARC has assigned a preliminary rating of AAA_IS(fg) to Malaysia Steel Works (KL) Bhd's (Masteel) proposed RM130.0 million Sukuk Ijarah Programme with a stable outlook. The assigned rating and outlook are based on the unconditional and irrevocable financial guarantee insurance provided by Danajamin Nasional Berhad (Danajamin) on which MARC has an insurer financial strength rating of AAA/stable and long-term counterparty credit rating of AAA/stable.

 

Masteel's standalone credit profile remains vulnerable to fluctuations in the price of steel, the cost of raw materials and regulatory changes. Given its relatively modest market position in the production of billets and bars mainly for local consumption, these factors have weighed on its profitability margins. At end-1Q2018, its combined total production capacity stood at 750,000 MT for billets and 700,000 MT for bars, achieving a rolling mill utilisation level of 74.6% for billets and 72.7% for bars (2016: 79.8%; 64.8%).

 

Masteel's profitability has steadily improved over the last five-year period as output rose and product mix improved to include a higher proportion of bars which generate higher margin. The group has also benefitted from the implementation of duties on steel imports in September 2016 which has driven demand for locally produced steel. However, the recent slowdown in domestic construction and property activities has exerted some pressure on steel suppliers. Domestic bar prices peaked at RM2,750/MT in January 2018 before softening to RM2,445/MT in June 2018.

 

In 1H2018, the company recorded weaker gross and operating margins of 7.5% and 4.4%, mainly attributable to a recent increase in key feedstock cost coupled with lower local steel prices. Masteel expects its performance to remain under pressure over the near term with a gross margin of RM225/MT in 2018, 3% lower than the RM232 achieved in 2017.

 

As at end-1H2018, Masteel's liquidity position remains modest with RM34.0 million in cash and equivalents and RM91.0 million in available credit facilities against short-term debt of RM285.8 million comprising mostly of bills payable and a term loan of RM32.5 million. The group's working capital requirement has risen alongside an increase in production capacity. Between 2013 and 2017, Masteel's total installed production capacity increased to 700,000 MT from 350,000 MT for bars and to 750,000 MT from 650,000 MT for billets. The expansion was mostly funded from internally generated funds. Its inventory days have increased to over 100 days, partly due to it holding a higher amount of scrap iron to offset rising input costs through larger purchases. Nonetheless, the company has improved its receivable days to below 40 days over the last three years.

 

Masteel's gearing level is manageable, with debt-to-equity at 0.44 times and debt-to-EBITDA at 3.1 times. Given expectations of a moderate contraction in earnings on rising operating costs, MARC expects leverage to rise following issuance under this rated programme to 0.60 times debt-to-equity and between 3.5 to 4.0 times debt-to-EBITDA.

 

Noteholders are insulated from downside risks in relation to Masteel's credit profile by the guarantee provided by Danajamin. Any changes in the supported rating or rating outlook will be primarily driven by changes in Danajamin's credit strength.

 

Contacts: Hari Vijay, +603-2717 2937/ harivijay@marc.com.my; Wan Abdul Muiz Wan Abdul Ghafar, +603-2717 2939/ muiz@marc.com.my

 

October 26, 2018

 

 

 

 [This announcement is available in MARC's corporate homepage at http://www.marc.com.my]

--- DISCLAIMER ---

This communication is provided by Malaysian Rating Corporation Berhad (MARC) on the basis of information believed by MARC to be accurate and reliable as derived from publicly available sources or provided by the rated entity or its agents. MARC, however, has not independently verified such information and makes no representation as to the accuracy or completeness of such information. Any assignment of a credit rating by MARC is solely to be construed as a statement of its opinion and not a statement of fact. A credit rating is not a recommendation to buy, sell, or hold any security.

 

© 2018 Malaysian Rating Corporation Berhad

 

IMPORTANT NOTICE:
The information contained in this email and/or any attachment hereto is strictly confidential and privileged. If you are not the intended recipient, and/or have received this email in error, you must not copy, disseminate or disclose the contents of this message and/or any attachment to any other person. Please notify the sender and delete this message and any attachment from your system. Malaysian Rating Corporation Berhad ("MARC") accepts no liability in respect of prohibited and unauthorised use by an unintended addressee or recipient. Any opinion, view or other information in this message and/or any attachment hereto which does not relate to the official business of MARC is that of the individual sender. Although this email and/or any attachment is believed to be free of any virus or other defect which may affect any computer system into which it is received and opened, it is the responsibility of the recipient to ensure that it is virus-free and MARC accepts no responsibility for any loss or damage arising in any way from the use thereof.

 

FW: RAM Ratings places Sarawak Power Generation’s rating on positive outlook

 

Published on 26 Oct 2018.

RAM Ratings has revised the outlook on the AA2(s) rating of Sarawak Power Generation Sdn Bhd's (SPG or the Company) RM215 million Serial Sukuk Musharakah (2006/2021) (the Sukuk), to positive from stable. This follows the recent (in August 2018) revision of Sarawak Energy Berhad Group (SEB or the Group)'s rating outlook, also to positive from stable. The enhanced rating continues to reflect SEB's strong support for SPG, which the former owns via its 100% held subsidiary, SEB Power Sdn Bhd. 

Syarikat SESCO Berhad (SESCO), a wholly owned subsidiary of SEB and SPG's sole off-taker, has been extending various forms of assistance to the Company. The most recent was in 2015, when SESCO allowed SPG to reset the rolling Equivalent Availability Factor (EAF) of Unit 8 of the Company's plant (the Plant) to enable it to minimise reductions in capacity revenue under the terms of its Power Purchase Agreement (PPA). This is further backed by a Letter of Support (LoS) from SESCO, dated 24 September 2007, in which it undertakes to ensure that SPG fully and promptly meets all its financial obligations in respect of the Sukuk throughout the tenure of the facility. 

SPG earns full Capacity Payments (CPs) as long as Units 7 and 8 of the Plant maintain a dependable capacity of 105 MW and a minimum EAF of 85%, regardless of the amount of electricity sold. However, Unit 9 earns Energy Payments on a take-or-pay basis. 

In 2017, the Plant's performance was affected by lengthy scheduled maintenance. At the same time, Unit 9 also faced operational challenges, which were eventually resolved in 1H 2018. We highlight, however, that the Company's CP losses are within our expectation. Meanwhile, the performance of Unit 7 and Unit 8 improved markedly in 1H 2018. Our sensitised cashflow projections indicate that SPG's minimum sukuk service coverage ratio (SSCR, with cash balances, post-distribution, calculated over a 12-month period on semi-annual principal repayment dates) will remain robust at around 1.50 times between 2018 and 2021. The Company has represented that it will prioritise its sukuk obligations over its capex, the repayment of advances to SEB and dividend distributions.

Typical of independent power producers, SPG is exposed to single-project risk. Additionally, the operations and maintenance (O&M) arrangement outlined in the PPA only covers broad issues of responsibility and compensation. Nevertheless, the absence of a formal O&M agreement between SPG and SESCO is unlikely to give rise to any dispute given the Group's strong commitment, as proven to date.  

SPG holds a licence to build, own and operate a 317-MW combined-cycle gas-turbine facility in Tanjung Kidurong, Bintulu, Sarawak.  

 

Analytical contact
Chinthamani Thanneermalai
(603) 7628 1013
chinthamani@ram.com.my

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my

 

 

FW: RAM Ratings places Mukah Power’s rating on positive outlook

 

Published on 26 Oct 2018.

RAM Ratings has revised the outlook on the AA2(s) rating of Mukah Power Generation Sdn Bhd's (MPG or the Company) RM665 million Senior Sukuk Mudharabah Programme (2006/2021), to positive from stable. This follows the recent (in August 2018) revision of Sarawak Energy Berhad Group's (SEB or the Group) rating outlook, also to positive from stable. The enhanced rating continues to reflect SEB's strong support for MPG, which the former owns via its 100%-held subsidiary, SEB Power Sdn Bhd.

In December 2017, a new Power Purchase Agreement (PPA) was inked between MPG and Syarikat SESCO Berhad (SESCO), a wholly owned subsidiary of SEB and MPG's sole off-taker, and was implemented from 1 January 2018. Support from SEB and SESCO have also taken the form of equity injection, a revision in tariffs for a specific period via a Supplementary Agreement signed in 2014 and the exclusion of major overhaul downtime in scheduled outages when computing MPG's Plant's (the Plant) equivalent availability factor for a specific span in 2016. Such assistance is also evident from a Letter of Support (LoS) – dated 21 August 2013 - extended to MPG by SESCO, in which the latter undertakes to ensure that the Company fully and promptly meets all its financial obligations in respect of the Senior Sukuk throughout the tenure of the facility.

MPG's exposure to demand risk remains minimal under the terms of its new PPA with SESCO. The Company is entitled to full Capacity Payments, subject to meeting certain performance requirements. It is also entitled to Energy Payments for electricity sold. Under the new PPA, the Company is expected to be able to fully pass through its fuel costs as long as the Plant operates within allowable heat rates, as per the PPA.

Since its inception, MPG's operating expenses have been exposed to cost fluctuations due to the absence of an operation and maintenance (O&M) agreement to allow for risk transfer to a third party. Based on our sensitivities, we expect MPG to register a minimum Senior Sukuk Coverage Ratio of 1.30 times throughout the tenure of the Sukuk as the Company projects hefty capex and O&M expenditure for the Plant between 2018 and 2021. Given the LoS and financial support from SESCO, we expect SEB to step in to meet any potential cash shortfall that the Company may face. As represented by the Company, we assume that there will be no distributions or subordinated payments to SEB. In the meantime, MPG remains exposed to single-project risk as it derives its income from a specific project. 

MPG is an independent power producer incorporated to construct, own, operate and maintain a 270-MW coal-fired power plant in Mukah, Sarawak, under a 25-year PPA with SESCO, which will expire on 15 January 2034. 

 

Analytical contact
Chinthamani Thanneermalai
(603) 7628 1013
chinthamani@ram.com.my

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my

  

 

FW: RAM Ratings reaffirms AA1 rating of Indera Persada’s serial bonds

 

Published on 24 Oct 2018.

RAM Ratings has reaffirmed the AA1/Stable rating of Indera Persada Sdn Bhd's (Indera Persada or the Company) RM280 million Fixed Rate Serial Bonds (2013/2028). The reaffirmation of the rating reflects the Company's continued ability to generate healthy cashflow to service financial obligations under its Serial Bonds, despite some issues in the performance of its maintenance services. Despite RAM's stress-test assumptions of delays in monthly and lump-sum payments from the Public Works Department (PWD), Indera Persada is envisaged to register a strong debt service cover ratio (DSCR, with cash balances, post-distribution in payment months) of at least 1.51 times throughout the tenure of the Serial Bonds, supported by a steady inflow of Availability Charges (ACs).

In return for the construction of the Centre of Excellence in Engineering and Technology (CREaTE) under a Concession Agreement (CA), Indera Persada is entitled to receive a highly predictable stream of monthly ACs from the PWD effective September 2016, for the next 15 years. This payment will be the sole source of repayment for the Serial Bonds. Indera Persada faces low counterparty risk as the ultimate obligor of monthly concession payments is the Government of Malaysia (GoM). 

To date, Indera Persada has incurred RM54,706 of monthly deductions on average, equivalent to 13.2% of the full eligible Maintenance Services Charges (MSCs). According to the management, the deductions are a result of disagreements over the quality of work performed by the Company. That said, likelihood of termination of the CA due to non-performance by Indera Persada is deemed low for the time being as the current level of deductions is well below the 25% trigger for three consecutive months that is required for the termination of the CA. We will continue to monitor the deduction levels for signs of further deterioration. 

The rating is moderated by the risk of delays in monthly ACs. In early 2018, payments were delayed by up to three months due to the implementation of a new IT system by the PWD. However, these payments are now back on schedule; the recurrence of such an event is deemed unlikely. 

Despite the CA's stipulation that the reimbursement of ICT and training equipment as well as PFI costs must be made in a lumpsum payment, these amounts had subsequently been renegotiated into several instalments. To date, the PWD has yet to settle RM3.85 million of the ICT and training equipment costs. Our sensitised cashflow analysis has incorporated further delays in the receipt of these reimbursements from the PWD. Even so, Indera Persada's debt-servicing ability remains intact as it will be balanced by the delay in distributions to shareholders. 

Despite the still-strong projected DSCRs, the buffer for the transaction has been reduced following the repayment of RM39.79 million to the Company's ultimate parent, Digistar Corporation Berhad in fiscal 2017. In addition, Digistar has issued a new, unrated Fixed Rate Serial Bond of up to RM80 million via its subsidiary, Jaya Persada Sdn Bhd. We expect the finance cost of the new bond issue to be partially serviced via distributions from Indera Persada. We highlight that the Company should be able to cumulatively distribute approximately RM41 million throughout the tenure of the Serial Bonds, without triggering a downward rating action. 

Indera Persada is a single-purpose company set up to undertake the development of and provide asset-management services to CREaTE in Malacca, under an 18-year CA with the GoM dated 18 March 2013.

 

Analytical contact
Aw Wei Xuan
(603) 7628 1198
weixuan@ram.com.my

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my

 

 

 

FW: RAM Ratings assigns AAA/Stable/P1 ratings to Telekom’s proposed sukuk

 

 

RAM Ratings assigns AAA/Stable/P1 ratings to Telekom's proposed sukuk

Published on 22 Oct 2018.

RAM Ratings has assigned AAA/Stable/P1 ratings to Telekom Malaysia Berhad's (TM or the Group) proposed Islamic MTN Programme and Islamic CP Programme with a combined aggregate nominal value of up to RM4 billion (the Proposed Sukuk). The ratings are anchored by the Group's dominance in fixed-broadband and fixed-line telecommunications, coupled with its critical function and strong relationship with the Government of Malaysia (GoM). TM is considered an integral part of the development of the domestic fixed-broadband platform vis-à-vis propelling Malaysia towards achieving its digital economy goals. These factors are expected to preserve TM's long-term credit profile. On that note, any significant change in TM's role and relationship with the GoM may affect the ratings. Among other things, the proceeds from the Proposed Sukuk will be deployed towards the capital expenditure and business operating requirements of TM and its subsidiaries, which shall be Shariah-compliant.

In the past, competition and the prospects of a price war within the broadband space had been relatively benign, as TM's strong market share and near-monopoly had enabled it to significantly influence the prices of its offerings. This had translated into more premium pricing and lower-speed offerings compared to the other players in this region. On 1 January 2018, the implementation of the revised Mandatory Standard on Access Pricing (MSAP), which sets a ceiling on the rates that TM can charge access seekers, triggered a move towards market-based pricing. With piling pressure from other fixed-broadband providers, industry-wide broadband subscription prices have been slashed for up to 65%, more than 25% markdown as per Malaysian Communications and Multimedia Commission's (MCMC) guidance in June 2018. 

In a bid to stave off any loss of market share, we expect the potential price war and keen competition to affect TM's business franchise and financial strength in the near to medium term. Our analysis indicates that the Group's debt-servicing aptitude may gradually deteriorate, with its funds from operations debt coverage (FFODC) is envisage to erode to 0.21 times while posting a peak gearing ratio of 1.60 times over the next two to three years (FY Dec 2017: 0.44 and 1.10 times). Meanwhile, the emergence of a new player in fixed telecommunication infrastructure - Tenaga Nasional Berhad - may threaten TM's position as the sole owner and operator of Malaysia's fibre network, although the immediate risks are deemed contained by the lengthy gestation period needed to lay out the fibres.

RAM has also reaffirmed existing programmes by TM and Hijrah Pertama Berhad (wholly-owned subsidiary of TM). For further details, please refer to the rating rationale published by RAM Ratings in June 2018.

 

Analytical contact
Nurhayati Sulaiman
(603) 7628 1040
yati@ram.com.my

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my

 

_____________________________________________________________________________________________________________________________________________________________________________________________

 

 

 

FW: MARC AFFIRMS AA+IS RATING ON CELCOM NETWORKS’ RM5.0 BILLION SUKUK MURABAHAH PROGRAMME; REVISES OUTLOOK TO STABLE

 

 

 

P R E S S  A N N O U N C E M E N T

 

FOR IMMEDIATE RELEASE

 

MARC AFFIRMS AA+_Is RATING ON celcom networks' RM5.0 BILLION SUKUK MURABAHAH PROGRAMME; REVISES OUTLOOK TO STABLE

 

MARC has affirmed its AA+_IS rating on Celcom Networks Sdn Bhd's (CNSB) RM5.0 billion Sukuk Murabahah Programme_. Concurrently, the rating outlook has been revised to stable from negative.

 

CNSB, a wholly-owned subsidiary of Celcom Axiata Berhad (Celcom), provides network telecommunication services to its parent. In assessing CNSB's rating, MARC considers the overall credit profile of the Celcom group given the financial and operational linkages within the group.

 

The revised outlook to stable factors in Celcom's improved credit profile that has benefitted from stronger operating performance and tighter discipline on dividend distribution. Despite facing increasing competitive pressure in a fast saturating market, Celcom has maintained a steady operating profit before interest, tax, depreciation and amortisation (OPBITDA) margin in line with the rating band. The rating affirmation and stable outlook also incorporate MARC's expectation that Celcom will sustain its market share as well as maintain a prudent capex programme and moderate shareholder distribution.

 

Celcom remains a key domestic mobile network operator with a strong operating cash flow (CFO) generating ability, notwithstanding the intense operating environment for domestic telco players. The telco industry has continued to face consolidation and migration from prepaid to postpaid that have led to a decline in the subscriber base for major telco players. For Celcom, its subscriber base contracted by 9.6% y-o-y to 9.5 million, but the decline was offset by higher growth in its average revenue per user (ARPU) to RM84 (postpaid) and RM32 (prepaid) in 2017 (2016: RM78; RM30).

 

The improvement came on the back of a series of measures to improve performance such as streamlining operations, improving sales and distribution channels as well as expanding its 4G network coverage. During the year under review, Celcom has also set up a digital mobile platform, Yoodo to increase its market reach. Although broadband services are the company's next growth driver, MARC expects Celcom to roll out these services in a gradual manner to mitigate the impact on operating margins. 

 

Revenue grew by 1.0% y-o-y to RM6.6 billion on the back of strong data revenue in 2017. The average monthly data usage climbed to 8.5GB at end-December 2017 from 3.9GB in the previous corresponding period. In 1H2018, the group's revenue grew by 3.6% to RM3.3 billion (1H2017: negative 4.3%). The implementation of MFRS 15 beginning January 1, 2018 onwards may impact Celcom's revenue recognition and consequently its profitability margins. MARC will monitor the impact of MFRS 15 on Celcom's financials.

 

CFO was flat at RM2.3 billion while net cash from investing activities was lower at RM1.3 billion in 2017 compared to RM2.2 billion in 2016 which was largely due to an initial payment of RM816.7 million for the 900MHz/1800MHz spectrum band. In 2017, Celcom invested RM1.3 billion on capex, primarily on network coverage as well as digital and retail transformation. Notwithstanding this, cash flow pressures remained in the near term given the impending payments for the 700MHz and 2600MHz spectrum bands in addition to the average capex of RM1.0 billion annually from 2018 to 2020. Free cash flow turned positive to RM1.0 billion in 2017 on non-distribution of dividends, leading to a significant increase in cash balances to RM1.8 billion. Celcom's shareholders' equity, which turned positive for the first time since a restructuring exercise in 2010, stood at RM146.8 million in 2017. Adjusted cash-to-debt ratio rose to 0.49 from 0.35 in the previous year.

 

 

Contacts: Lim Chi Ching, +603-2717 2963/ chiching@marc.com.my ; David Lee, +603-2717 2955/ david@marc.com.my

 

October 22, 2018

 

 

[This announcement is available in MARC's corporate homepage at http://www.marc.com.my]

----   DISCLAIMER    ----

This communication is provided by Malaysian Rating Corporation Berhad ("MARC") on the basis of information believed by MARC to be accurate and reliable as derived from publicly available sources or provided by the rated entity or its agents. MARC, however, has not independently verified such information and makes no representation as to the accuracy or completeness of such information. Any assignment of a credit rating by MARC is solely to be construed as a statement of opinion and not a statement of fact. A credit rating is not a recommendation to buy, sell, or hold any security.

 

© 2018 Malaysian Rating Corporation Berhad

 

IMPORTANT NOTICE:
The information contained in this email and/or any attachment hereto is strictly confidential and privileged. If you are not the intended recipient, and/or have received this email in error, you must not copy, disseminate or disclose the contents of this message and/or any attachment to any other person. Please notify the sender and delete this message and any attachment from your system. Malaysian Rating Corporation Berhad ("MARC") accepts no liability in respect of prohibited and unauthorised use by an unintended addressee or recipient. Any opinion, view or other information in this message and/or any attachment hereto which does not relate to the official business of MARC is that of the individual sender. Although this email and/or any attachment is believed to be free of any virus or other defect which may affect any computer system into which it is received and opened, it is the responsibility of the recipient to ensure that it is virus-free and MARC accepts no responsibility for any loss or damage arising in any way from the use thereof.

 

FW: MARC ASSIGNS ICSR OF A-ND TO MAYBANK ISLAMIC AND AFFIRMS ITS FINANCIAL INSTITUTION RATINGS OF AAA/MARC-1

 

 

 

P R E S S    A N N O U N C E M E N T

                       

FOR IMMEDIATE RELEASE

 

MARC ASSIGNS ICSR OF A-_ND TO MAYBANK ISLAMIC AND AFFIRMS ITS FINANCIAL INSTITUTION RATINGS OF AAA/MARC-1

 

MARC has affirmed Maybank Islamic Berhad’s long-term and short-term financial institution (FI) ratings of AAA and MARC-1 based on the domestic rating scale. Maybank Islamic’s long-term FI rating is equalised to parent Malayan Banking Berhad’s (Maybank) rating of AAA, based primarily on its strategic importance to the Maybank group. The ratings outlook is stable.

 

MARC has also assigned a non-domestic intrinsic credit strength rating (ICSR) of A-_ND to the bank. The ICSR is an assessment of Maybank Islamic’s standalone credit profile and considers its healthy capital buffer and satisfactory funding and liquidity position. The ICSR also factors in the bank’s strong domestic Islamic banking franchise and resilient earnings in the highly competitive Islamic banking sector.

 

The stable ratings outlook on Maybank Islamic reflects MARC’s expectations that the bank will remain a core entity of the Maybank group and sustain its strong market position in the domestic Islamic banking sector.

 

Maybank Islamic has maintained its leading position in the domestic Islamic banking sector, benefitting from shared branding and resources of its parent Maybank. Its total gross financing stood at RM171.1 billion as at end-June 2018, translating to a market share of 33.2% of Islamic financing in Malaysia. The bank’s business growth continues to be supported by its parent’s “Islamic first” strategy of prioritising Islamic financing services to its customers. As at end-June 2018, Maybank Islamic’s gross financing totalled RM171.1 billion, registering a 10.7% growth y-o-y.

 

As at end-June 2018, Maybank Islamic’s gross impaired financing (GIF) ratio stood at 1.35%, an increase from 1.05% at end-2017. The increase in the GIF ratio was due to higher impairments in the shipping industry and a one-off increase of RM121.4 million following the adoption of MFRS 9 in January 2018. Excluding the effect of the new accounting rule, the GIF ratio would stand at 1.28% as at end-June 2018. Over the near term, MARC is of the view that Maybank Islamic may face some downside risks given the increasing challenges in the domestic economy.

 

The one-off impact from the adoption of MFRS 9 as well as higher risk-weighted assets (RWA) over the quarter led to a decline in the bank’s CET1, Tier 1 and total capital ratios to 13.2%, 14.7% and 19.0% (2017: 14.5%, 16.2% and 20.8%). Maybank Islamic has and will continue to receive capital support from its parent through the absorption of RWA. As at end-June 2018, RWA absorbed by the parent and investment account holders stood at RM16.4 billion (equivalent to capital savings of 3.06%).

 

In 1H2018, Maybank Islamic recorded slightly lower net profit of RM743.0 million (1H2017: RM776.7 million) on higher impairments from the shipping sector as well as higher provision requirements under MFRS 9. The bank’s net financing margin was flat at 1.88% (2017: 1.88%), while its cost-to-income ratio was 33.6% (2017: 35.1%).

 

Maybank Islamic’s liquidity position remains healthy, with its gross financing-to-fund ratio standing at 89.8% as at end-June 2018 (2017: 87.8%). In terms of funding, the bank has reduced its reliance on costlier investment accounts which declined to RM19.2 billion or 9.7% of total funding (2017: RM24.6 billion; 12.8%).

 

Contacts: Douglas De Alwis, +603-2717 2965/ douglas@marc.com.my; Sharidan Salleh, +603-2717 2954/ sharidan@marc.com.my. 

 

October 16, 2018

 

 

[This announcement is available in MARC’s corporate homepage at http://www.marc.com.my]

----   DISCLAIMER    ----

This communication is provided by Malaysian Rating Corporation Berhad (MARC) on the basis of information believed by MARC to be accurate and reliable as derived from publicly available sources or provided by the rated entity or its agents. MARC, however, has not independently verified such information and makes no representation as to the accuracy or completeness of such information. Any assignment of a credit rating by MARC is solely to be construed as a statement of its opinion and not a statement of fact. A credit rating is not a recommendation to buy, sell, or hold any security.

 

© 2018 Malaysian Rating Corporation Berhad

 

IMPORTANT NOTICE:
The information contained in this email and/or any attachment hereto is strictly confidential and privileged. If you are not the intended recipient, and/or have received this email in error, you must not copy, disseminate or disclose the contents of this message and/or any attachment to any other person. Please notify the sender and delete this message and any attachment from your system. Malaysian Rating Corporation Berhad (“MARC”) accepts no liability in respect of prohibited and unauthorised use by an unintended addressee or recipient. Any opinion, view or other information in this message and/or any attachment hereto which does not relate to the official business of MARC is that of the individual sender. Although this email and/or any attachment is believed to be free of any virus or other defect which may affect any computer system into which it is received and opened, it is the responsibility of the recipient to ensure that it is virus-free and MARC accepts no responsibility for any loss or damage arising in any way from the use thereof.

 

FW: MARC AFFIRMS KAF INVESTMENT BANK’S FI RATINGS AT AA-/MARC-1

 

 

 

P R E S S  A N N O U N C E M E N T

 

FOR IMMEDIATE RELEASE

 

MARC AFFIRMS KAF INVESTMENT BANK'S FI RATINGS AT AA-/MARC-1 

 

MARC has affirmed its long-term and short-term financial institution (FI) ratings of AA- and MARC-1 on KAF Investment Bank Berhad (KAF IB) with a stable outlook.

 

The affirmed ratings primarily reflect KAF IB's strong capital ratios and liquidity levels, underpinned by a conservative investment strategy. The rating is moderated by the susceptibility of KAF IB's performance to domestic capital market conditions and interest rate movements. The stable outlook reflects MARC's expectations that KAF IB will manage its credit and market risks in relation to its operations and continue to adhere to a prudent investment policy.

 

KAF IB's assets are dominated by highly liquid Malaysian sovereign securities, negotiable instruments of deposits (NID) and private debt securities (PDS), with a combined total of RM7.2 billion as at end-February 2018. Accounting for 87.0% of the bank's total assets, this composition has enabled the bank to readily adjust its investment portfolio in response to anticipated market movements as well as to mitigate funding volatility.

 

KAF IB's fixed income securities continue to be characterised by high credit quality, with about 84.0% of the outstanding amount consisting of sovereign issuances and PDS with AAA ratings or government guarantees as at end-February 2018. The lowest quality bonds are rated in the A band, which comprise a marginal 0.7% of its fixed income securities. The bank's Tier 1 and total capital ratios stood at a healthy 130.2% and 131.2% as at end-February 2018, well above the Malaysian investment banking industry average of 32.7% and 35.6%. MARC observes that KAF IB's capital comprised quality components, primarily paid-up capital, retained earnings and statutory reserves. These made up around 95.1% of the total capital base.

 

For the nine months ended February 28, 2018 (9MFY2018), KAF IB recorded revenue and pre-tax profit of RM143.2 million and RM85.4 million. Its 98.9%-owned stockbroking subsidiary KAF-Seagroatt & Campbell Berhad generated brokerage fee income of RM29.5 million or about 20.6% of revenue. It has launched an online brokerage system and related mobile application in 1Q2018 to strengthen its mobile banking operations. Nonetheless, profitability was lower y-o-y due to weaker market conditions which led to a decrease in disposal gains of securities. The rise in the overnight policy rate (OPR) also led to higher interest expense of RM148.5 million (9MFY2017: RM110.5 million).

 

Contacts: Douglas De Alwis, +603-2717 2965/ douglas@marc.com.my; Sharidan Salleh, +603-2717 2954/ sharidan@marc.com.my

 

October 16, 2018

 

[This announcement is available in MARC's corporate homepage at http://www.marc.com.my]

----   DISCLAIMER    ----

This communication is provided by Malaysian Rating Corporation Berhad ("MARC") on the basis of information believed by MARC to be accurate and reliable as derived from publicly available sources or provided by the rated entity or its agents. MARC, however, has not independently verified such information and makes no representation as to the accuracy or completeness of such information. Any assignment of a credit rating by MARC is solely to be construed as a statement of opinion and not a statement of fact. A credit rating is not a recommendation to buy, sell, or hold any security.

 

© 2018 Malaysian Rating Corporation Berhad

 

 

 

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FW: AAM News: Japan’s Dai-ichi Life invests 300 million yen in cyborg technology startup

 

 

 

If you cannot view this mail please click here.   Latest News  |  Magazine  |  Events  |  Best of the Best Awards  |  E-Magazine   Latest News 22 October 2018 Japan's Dai-ichi Life invests 300 million yen in cyborg technology startup Responsible investing: Dai-ichi Life expects high return and positive social impact from the investment   Thai mutual fund assets up in January-September on equity gains Investments: Net asset value of equity funds up 5% between January and September, bond funds down 5.7% Read More PE Panorama: Skin in the game likely helps Private Equity: Investors should hope a fund takes prudent, selective approach – and that the head puts in own money Read More China A-shares ETFs' underlying benchmarks seen to drive flows Exchange-traded Fund: The popularity of benchmarks expected to determine demand, market players say Read More Monthly Top Ten New Hong Kong group to advise government on green finance Manulife's Hong Kong unit names Yvonne Sin as independent director PE Panorama: Unsatisfied with hedge funds, family offices turn to private equity PE Panorama: Meltdown in China's private equity market looms Singapore and Indonesia regulators ink fintech pact South Korea's NPS appoints State Street as service provider, BNY Mellon as custodian HSBC Securities Services named custodian of Ping An's first RAIF fund ETF managers eager to take advantage of growth potential in Asia market, Vanguard says Japan's GPIF picks S&P Dow Jones carbon efficient indexes as ESG benchmarks Asian asset managers see revenue rising to US$112 billion by 2022, McKinsey says   Coming Up           As per the Guidance on Direct Marketing issued by the Office of the Privacy Commissioner for Personal Data in Hong Kong which took effect on April 1, 2013, we would like to inform you that we intend to continue sending you promotional emails such as newsletters, new promotions and product updates. If you do not wish to receive such emails, please contact us at news@asiaasset.com. For enquiries please contact us at (852) 2547-7331.     Unsubscribe to this mailing list COPYRIGHT © 2018 ASIA ASSET MANAGEMENT. ALL RIGHTS RESERVED. 1701 Singga Commercial Centre, 148 Connaught Road West, Hong Kong   Tel: (852) 2547-7331   E-mail: enquiries@asiaasset.com