Eurozone ministers meeting to discuss debt concerns

Senior European Union officials are meeting later to discuss the eurozone's continuing debt woes.

The talks in Brussels were arranged over the weekend by European Council president Herman Van Rompuy. His spokesman denied that it was a crisis meeting.

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RAM Ratings reaffirms BAT Malaysia's AAA/P1 ratings

Published on 07 July 2011
RAM Ratings has reaffirmed the AAA/P1 ratings of British American Tobacco (Malaysia) Berhad’s (BAT Malaysia or the Group) RM100 million Commercial Papers/Medium-Term Notes Programme (2007/2014). At the same time, the AAA rating of the Group’s RM700 million Medium-Term Notes Programme (2007/2020) has also been reaffirmed. Both the long-term ratings have a stable outlook.

BAT Malaysia’s credit profile is supported by its entrenched market position and superior financial profile. Although its share of domestic sales contracted 0.6 percentage points year-on-year in 2010, the Group remained the clear leader with a 59.7%-share of the market. Its flagship Dunhill remained the most popular local premium brand last year, with a 65.6%-share (2009: 64.8%) of this segment. The Group also garnered a significant 33.5%-share of the value-for-money segment (2009: 33.7%). Despite the challenging landscape of the tobacco industry, BAT Malaysia’s adjusted funds from operations and operating cashflow debt cover ratios stayed superior at above 1 time as at end-December 2010.

Offsetting the above strengths are the increasingly difficult operating environment and regulatory risks of the local tobacco industry. The industry’s sales volumes are still vulnerable to excise-duty hikes and the proliferation of illicit cigarettes.

Industry sales volumes declined for the seventh consecutive year in 2010, following a steep 16% spike in excise duty last October. While the incidence of illicit cigarettes had reduced slightly from its peak of 37.5% in 2009 to 36.3% in 2010, they still accounted for a significant portion of local tobacco consumption. Despite the minimum pricing imposed on cigarettes last year, we understand that certain manufacturers of extremely-low-priced cigarettes have been selling their output below floor prices, in a bid to gain market share. Should this persist, the sales volumes of the 3 major domestic tobacco manufacturers – BAT Malaysia, JT International Berhad and Phillip Morris Sdn Bhd – may be affected.

At the same time, BAT Malaysia’s margins are expected to be squeezed by a full year’s effect from the withdrawal of 14-stick packs (which yield higher margins than 20-stick packs). Nonetheless, the Group’s profitability is viewed to remain commendable relative to its AAA-rated peers. “Looking ahead, we expect BAT Malaysia’s cashflow-protection measures to stay superior, supported by its well-established market position and strong brand equity,” opines Kevin Lim, RAM Ratings’ Head of Consumer & Industrial Ratings.

Media contact
Low Su Lin
(603) 7628 1071
sulin@ram.com.my

Is Business a zero sum game?

This is a very important question that needs to be answered. Is business a zero sum game?



By definition, business is about trade. Since population is a factor of demand, tradesman is a factor of business. Therefore, in business, assuming at the supply-demand equilibrium, the entry of a tradesman into the equation meant a reduction in demand for existing tradesmen to keep the supply-demand point fixed.

The possibility occurs in monopolistic or oligopolistic industries.



So, if you ever decide to go into business in such industry, expect resistance to your entry!

RAM Ratings reaffirms NACF's AAA debt rating

Published on 05 July 2011
RAM Ratings has reaffirmed the AAA rating of National Agricultural Cooperative Federation’s (NACF or the Cooperative) senior notes under its Medium-Term Notes Programme of up to RM3.3 billion (MTN); the long-term rating has a stable outlook.

The rating is anchored by NACF’s strategic importance to the Government of South Korea (GoK) in implementing agricultural policies as well as improving the economic and social status of farmers in South Korea. NACF also acts as a “central bank” to member cooperatives via its mutual credit services. Given the Cooperative’s crucial role, it derives strong financial support from the GoK.

NACF is currently undergoing a reorganisation that involves separating its profit centres into 2 new holding companies, i.e. financial and non-financial.

Post-reorganisation, the MTN will likely be vested over to a newly established subsidiary, NH Bank (currently known as the Cooperative’s credit and banking unit), under the financial holding company; this will remain NACF’s core profit centre. As expressed in its recent letter of support, the GoK will provide the necessary backing, such as capital injections and tax exemptions, to facilitate the reorganisation. The capital-adequacy ratio of NH Bank is also expected to remain strong at about 15%. We are of the view that both NACF and NH Bank will continue benefiting from the GoK’s sturdy support, underpinned by their pivotal roles in the country’s agricultural policies.

As at end-December 2010, NACF’s gross non-performing-loan (NPL) ratio had deteriorated to 2.5% while its credit-cost ratio had increased to 0.9% (end-December 2009: 1.3% and 0.7%), driven by higher NPLs and heftier provisioning for real-estate project financing and corporate loans amid the sluggish property sector. Nonetheless, the Cooperative’s gross NPL ratio eased marginally to 2.3% as at end-March 2011; we expect the ratio to be reduced to below 2% by the end of this year, backed by NPL disposals and write-offs. Meanwhile, NACF’s credit cost is expected to remain elevated in fiscal 2011.

All said, the Cooperative boasts a healthy funding profile, as evinced by its large share of South Korea’s customer deposits – a testament to its extensive branch network. NACF’s capitalisation remained strong as at end-March 2011, with respective tier-1 and overall risk-weighted capital-adequacy ratios of 12.8% and 16.5% (end-December 2010: 12.2% and 16.0%).

Media contact
Gladys Chua
(603) 7628 1049
gladys@ram.com.my

RAM Ratings assigns AAA/P1 ratings to CIMB Islamic Bank; reaffirms ratings of CIMB Group Holdings, CIMB Bank and CIMB Investment Bank

Published on 04 July 2011
RAM Ratings has assigned respective long and short-term financial institution ratings of AAA and P1 to CIMB Islamic Bank Berhad (CIMB Islamic) while reaffirming the AAA and P1 financial institution ratings of CIMB Bank Berhad (CIMB Bank) and CIMB Investment Bank Berhad (CIMB IB). Concurrently, we have also reaffirmed the AA1/P1 corporate credit ratings of CIMB Group Holdings Berhad (CIMBGH or the Group) as well as the AA1/P1 ratings of its RM6 billion Conventional and Islamic Commercial Papers/Medium-Term Notes Programme (2008/2038), along with the AA3 rating of its RM3 billion Subordinated Notes Programme (2009/2074). All the long-term ratings have a stable outlook.

CIMB Bank, CIMB Islamic and CIMB IB collectively form the third-largest universal-banking group by assets in Malaysia, and are viewed to be systemically important. The AAA/Stable/P1 ratings reflect their integrated operations and close relationships, particularly the ability to leverage on distribution channels, treasury operations and risk-management systems, as well as their strong and entrenched franchise and market positions. Meanwhile, CIMBGH’s ratings are supported by the sound credit fundamentals of its subsidiaries and the Group’s expanding regional franchise.

CIMBGH is the fifth-largest banking group in ASEAN in terms of assets; it enjoys a strengthening franchise in the region. In Malaysia, the Group remains among the top players in consumer banking, and is a leader in investment-banking and stockbroking league tables. Meanwhile, the Group’s domestic Islamic banking business, conducted via CIMB Islamic, has made strides in its financing and deposit-expansion strategy – Islamic financing facilities and deposits expanded 18% and 14%, respectively, in 2010.

While the Malaysian entities still contribute most (52%) of the Group’s pre-tax profits, PT CIMB Niaga Tbk (CIMB Niaga) - its Indonesian commercial-banking subsidiary - is a crucial component in CIMBGH’s profit aspirations. In FY Dec 2010, contributions from CIMB Niaga made up 34% of the Group’s consolidated pre-tax profit of RM4.7 billion (FY Dec 2009: 21% and RM3.8 billion). CIMB Niaga is Indonesia’s fifth-largest bank by assets, and CIMBGH’s largest overseas subsidiary. Elsewhere, the Group has a smaller presence in Thailand through CIMB Thai Bank Public Company Ltd (CIMB Thai, a subsidiary of CIMB Bank). Although CIMB Thai’s profitability has improved, it remains a marginal contributor of the Group’s pre-tax gains.

Notably, CIMBGH’s banking entities continue to constitute the lion’s share of its profits; its asset-management and insurance division only accounted for 2% in fiscal 2010. As at end-March 2011, the Group’s gross impaired-loan (GIL) ratio of 5.9% was better than its restated GIL ratio of 7.6% as at end-December 2009. Meanwhile, its credit-cost ratio was kept low at 0.4% in FY Dec 2010, with one-off impairment adjustments made on its retained earnings - a result of having adopted FRS 139 for provisioning purposes.

Including the borrowings of CIMB Group Sdn Bhd (the intermediate holding company), CIMBGH’s adjusted gearing ratio had eased to 0.31 times as at end-December 2010 (end-December 2009: 0.4 times); its double-leverage ratio stood at 1.15 times. The dividends received by CIMBGH from its Malaysian subsidiaries have been sufficient for its debt servicing needs. To sustain capital for business growth, CIMB Niaga did not pay any dividends to its parent in fiscal 2010, and is expected to continue retaining its earnings this year for future growth. CIMB Niaga’s capital management plans also include the issuance of subordinated debt.

Over the medium term, profit contributions from CIMBGH’s foreign operations are expected to surpass those of its Malaysian entities. Although the Group’s geographical expansion strategy has aided its earnings diversification, RAM Ratings is mindful of the risks associated with rapid expansion in emerging markets. On this note, we will keep monitoring CIMBGH’s ability to manage these risks, as well as the extent of financial support required by its emerging-market entities.

CIMB Bank Berhad
CIMB Bank’s AAA/Stable/P1 ratings are supported by its systemic importance as Malaysia’s third-largest commercial bank by assets; it held 11% of the domestic banking industry’s loans and deposits as at end-December 2010. CIMB Bank’s profit performance remained resilient in fiscal 2010, with a 16% jump in pre-tax profit to RM3 billion. Nonetheless, we note some compression in net interest margins, along with relatively high operating costs.

As at end-December 2010, CIMB Bank’s asset quality was moderately healthy, with an improved GIL ratio of 3.9% (end-December 2009: restated GIL of 6.2%). On the whole, its funding and liquidity profiles remained healthy, aided by strong accumulation of deposits. We opine that CIMB Bank’s capitalisation levels are favourable, with respective tier-1 and overall risk-weighted capital-adequacy ratios (RWCARs) of 11.4% and 14.9% as at end-December 2010.

CIMB Islamic Bank Berhad
CIMB Islamic’s AAA/Stable/P1 ratings are anchored by the high degree of integration between its operating model and that of its parent, CIMB Bank. CIMB Islamic leverages on its parent’s back-room operations, risk-management systems, treasury operations and distribution channels, and also benefits from CIMB Bank’s strong franchise and market position. CIMB Islamic is the second-largest Malaysian Islamic commercial bank in terms of assets, with a 14.3%-share of the Islamic banking industry’s assets as at end-2010. Its gross financing portfolio augmented 39% to RM23 billion in FY Dec 2010 - the primary reason for the surge in its pre-tax profit to RM403.8 million the same year.

CIMB Islamic’s asset quality is deemed moderate, although RAM Ratings notes that its financing portfolio remains unseasoned due to its rapid expansion in the last few years. On the back of a larger financing base, CIMB Islamic’s gross impaired-financing ratio only came up to 1.5% as at end-December 2010. On the other hand, its financing-loss provisions over average gross financing ratio remained high at 1.0%, albeit better than the 2.5% of a year earlier. With financing growth ahead of deposit accumulation, CIMB Islamic’s financing-to-deposits ratio had risen to 99% as at end-December 2010. While this ratio is high, funding and liquidity support from CIMB Bank has been observed, with inter-bank deposits from the latter making up almost 25% of CIMB Islamic’s profit-bearing funds. We consider CIMB Islamic’s tier-1 and overall RWCARs to be healthy, at a respective 13.2% and 17.2% as at end-December 2010, following a rights issue and a smaller risk-weighted asset base.

CIMB Investment Bank Berhad
CIMB IB holds AAA/Stable/P1 ratings; it is the investment-banking, advisory and stockbroking arm of the larger Group. Its ratings mirror those of its sister company, CIMB Bank, and reflect the close relationship between these 2 entities. CIMB IB has retained its leadership in Malaysian mergers and acquisitions, advisory services, debt-capital-market as well as equity league tables, and secondary equity-market trades.

Given the robust capital markets last year and the procurement of major deals, CIMB IB’s fee and brokerage income surged to a respective RM260.2 million and RM163.7 million in FY Dec 2010 (FY Dec 2009: RM235.7 million and RM108.6 million).

Nonetheless, this had been partially offset by a hefty RM80 million one-off provision on losses from its investment-management and securities services. As a result, its pre-tax profit diminished 53% year-on-year to RM96.2 million in fiscal 2010 (FY Dec 2009: RM204.7 million). As at end-December 2010, CIMB IB’s overall RWCAR stood at 17.1%. While this is lower than the Malaysian investment-banking industry’s average of 35% as at the same date, capital support from the Group is expected to be forthcoming, if needed.

Media contacts
Joanne Kek
(603) 7628 1163
joanne@ram.com.my

RAM Ratings upgrades ratings of EON Bank’s debt securities, withdraws financial institution ratings

Published on 01 July 2011

RAM Ratings has upgraded the rating of EON Bank Berhad’s (EON Bank or the Group) Innovative Tier-1 Capital Securities Issuance Programme of up to RM1 billion to AA3 from A3. Concurrently, the rating of Subordinated Medium-Term Notes (MTN) Issuance Programme of up to RM2 billion has also been upgraded to AA2 from A2. Both the long-term ratings carry a stable outlook.

The ratings upgrade is premised on the credit standing of the new obligor of EON Bank’s debt securities, i.e. Hong Leong Bank Berhad (Hong Leong Bank), whose financial institution ratings of AA1/Stable/P1 were reaffirmed on 29 April 2011. Pursuant to the vesting order granted by the High Court on 17 June 2011, all the assets and liabilities of EON Bank are to be transferred to Hong Leong Bank on 1 July 2011.

The 1-notch rating differential between Hong Leong Bank’s AA1 long-term financial institution rating and the AA2 rating of its Subordinated MTN Issuance Programme reflects the subordination of the debt facility to the Group’s senior unsecured obligations. Meanwhile, the 2-notch rating differential between Hong Leong Bank’s long-term financial institution rating and the AA3 rating of its Innovative Tier-1 Capital Securities Issuance Programme reflects the deeply subordinated nature of the latter and its embedded interest-deferral feature.

RAM Ratings has withdrawn the A1/P1 financial institution ratings of EON Bank with immediate effect. As such, we no longer have any rating obligations on the Group.

Media contact
Amy Lo
(603) 7628 1078
amy@ram.com.my

RAM Ratings withdraws SPLASH’s debt rating, discontinues rating updates on proposed bonds of Destinasi Teguh and Sungai Harmoni

Published on 30 June 2011

RAM Ratings has withdrawn the rating of Syarikat Pengeluar Air Sungai Selangor Sdn Bhd’s (SPLASH or the Company) RM1,407 million Al-Bai Bithaman Ajil Debt Securities Issuance Facility (BaIDS) (2000/2016), and will no longer maintain rating surveillance on the debt facility. This follows the Company’s request for the withdrawal of its debt rating.

Prior to the rating withdrawal, the BaIDS had carried a BBB3 rating, which had been on negative Rating Watch. The negative Rating Watch had reflected SPLASH’s strained liquidity profile arising from poor collections from its sole counterparty, Syarikat Bekalan Air Selangor Sdn Bhd, amid the protracted restructuring of Selangor’s water industry. RAM Ratings highlights that if the debt facility had remained under surveillance, the rating would have been subjected to further downward pressure.

Meanwhile, the management of both Destinasi Teguh Sdn Bhd and Sungai Harmoni Sdn Bhd has requested that the ratings of their proposed bond issues be kept private. As such, RAM Ratings will no longer provide rating updates on the proposed bond issues of Destinasi Teguh Sdn Bhd and Sungai Harmoni Sdn Bhd.

Media contact
Chew Wei Li
(603) 7628 1025
weili@ram.com.my

RAM Ratings reaffirms ratings of Premium Commerce's Notes Series 2010-A

Published on 30 June 2011
RAM Ratings has reaffirmed the respective AAA and AA2 ratings of Premium Commerce Berhad’s (PCB) RM211 million Class A and Class B Notes Series 2010-A (collectively, Notes Series 2010-A), with a stable outlook. As at 4 May 2011, RM163 million of the Class A and Class B Notes remained outstanding.

This transaction involves the securitisation of automobile hire-purchase (HP) receivables from Tan Chong & Sons Motor Company Sdn Bhd (TCSM) and TC Capital Resources Sdn Bhd (TC Cap) under PCB’s RM2 billion Medium-Term Notes (MTN) Programme.

The reaffirmation of Notes Series 2010-A’s ratings reflects the available credit enhancement provided by the overcollateralisation (OC) ratios supported by the HP receivables securitised under Note Series 2010-A. The OC ratios for the Class A and Class B Notes stand at a respective 12.45% and 8.32%. While the current OC ratios amply support even higher levels of stress for the Class B Notes, they are required given the higher-than-expected default levels observed in the most recent static-pool data in 4Q 2010. RAM Ratings will continue monitoring the portfolio’s performance to ascertain that default and prepayment levels remain stable, without diluting the available credit enhancement.

The average monthly net default rate in recent months has averaged at 0.01% (based on the initial HP principal balance) - well within our monthly ramp-up default assumption of 0.03%. Meanwhile, the average monthly prepayment rate stands at 0.25% - lower than our monthly high-prepayment-rate assumption of 1.25% but lower than the low-prepayment-rate assumption of 0.30%. Given the 25-basis-point increase in the overnight policy rate in May 2011 and expectations of further rate hikes in 2H 2011, we do not envisage prepayments to rise as any spike in interest rates will reduce borrowers’ incentive to refinance.

Meanwhile, the ratings are also supported by the transaction’s legal and payment structures. This mainly involves the pass-through mechanism that allows any collections - after meeting senior expenses and coupon obligations - to be deployed for early redemption of the Notes on each quarterly coupon-payment date, in the pre-determined order of priority. This partially addresses the negative carry of the Notes Series due to low investment returns.

RAM Ratings notes that TC Cap's capacity to manage a rapidly expanding loan portfolio remains a moderating factor for the transaction. The challenge in managing a growing loan portfolio may had in turn affected the underlying HP receivables as well as the efficacy of the Servicer’s collection and monitoring procedures. We have factored this risk in to our cashflow assessment, having revised our default assumption in November 2010. Nonetheless, we note that TC Cap has made some effort to improve its operations, such as upgrading its information-technology system and strengthening its human-capital base. At the same time, TC Cap has also improved the credit quality of its loans by tightening its internal credit-assessment guidelines, particularly on loan applications for the purchase of "mass market" car models. Since the changes, we have observed lower default rates in the latest 2009 static pool.

As at 30 April 2011, the HP receivables in the portfolio comprised 3,586 HP contracts, with an outstanding principal balance of RM168.40 million. These loans had a weighted-average seasoning of about 20 months and a weighted-average remaining tenure of 48 months. The average size of the loans stood at RM51,882 as at the same date.

Media contact
Ang Swee Ee
(603) 7628 1113
sweeee@ram.com.my

RAM Ratings reaffirms Industrial Bank of Korea’s AAA debt rating

Published on 29 June 2011

RAM Ratings has reaffirmed the AAA rating of Industrial Bank of Korea’s (IBK or the Bank) RM3 billion Conventional and/or Islamic Medium-Term Notes Programme, with a stable outlook. The rating reflects IBK’s strategic and public-policy role in relation to South Korea’s small and medium-sized enterprises (SMEs), as well as government support in maintaining the Bank’s solvency under the IBK Act. The Bank’s privileged status is also highlighted by its ability to issue lower-cost debentures in the form of small and medium-industry finance (SMIF) bonds for its funding purposes.

Meanwhile, we do not expect the privatisation of IBK to materialise anytime soon, as the regulators focus on safeguarding the soundness of the South Korean financial system amid concerns over the country’s real-estate sector. While IBK’s privatisation is inevitable in the long run, the process is likely to be a gradual one, in the interest of maintaining financial stability. On this note, we expect the South Korean government to progressively reduce its equity but remain a controlling shareholder. As such, we expect IBK to continue benefiting from strong government support in the medium term.

The slump in the South Korean property market, meanwhile, has negatively affected the construction- and real-estate-related sectors, with real-estate project financing the worst hit. Like most banks in the country, IBK has not been spared from the effects of the downturn. The Bank’s gross non-performing-loan ratio weakened to 1.8% as at end-December 2010 (end-December 2009: 1.4%). At the same time, loan-loss provisions over average gross loans climbed up to 1.4% (end-December 2009: 1.0%), albeit partly to maintain a robust coverage level. While credit losses are expected to be reduced this year amid the new provisioning method under the Korean International Financial Reporting Standards, weaknesses in the construction and real-estate sectors are unlikely to ease in the near term, and could lead to further deterioration in asset quality. IBK’s substantial exposure to the SME sector (79% of its loan portfolio) may also amplify the pressure on its asset quality, given the withdrawal of supportive measures for the sector in 2010.

Reflecting IBK’s weak base of customer deposits, its loans-to-deposits (LD) ratio came up to a high 226.1% as at end-December 2010. Including SMIF bonds issued over the counter to retail clients, the Bank’s adjusted LD ratio stood at 161% as at the same date - still significantly above the industry average of 118.3%. On another note, IBK’s overall and tier-1 risk-weighted capital-adequacy ratios stayed adequate at 12.3% and 8.9%, respectively, as at end-December 2010 (end-December 2009: 11.7% and 8.5%). Although these were below the corresponding 14.6% and 11.6% averages of the South Korean banking system and its AAA-rated peers, we believe that the South Korean government will extend its support should the need arise – as demonstrated by its capital injections during the recent global financial crisis.

Media contact
Amy Lo
(603) 7628 1078
amy@ram.com.my

RAM Ratings reaffirms Rubberex's rating; outlook revised from stable to negative

Published on 28 June 2011

RAM Ratings has reaffirmed the A2 rating of Rubberex Corporation (M) Berhad’s (Rubberex or the Group) RM50 million Medium-Term Notes (MTN) Programme (2006/2013). However, the outlook on the rating has been revised from stable to negative. Rubberex is involved in the manufacture and sale of vinyl, household and industrial gloves as well as the trading of personal protective products.

The revision of the rating outlook primarily reflects RAM Ratings’ concerns on Rubberex’s vinyl-glove business. The Group’s China-based vinyl-glove operations have been affected by overcapacity in the region following the entrance of many new players and the doubling of production from existing manufacturers in the last 2 years. The situation had exerted downward pressure on selling prices and made it challenging for the Group to pass on the higher raw material costs, which trimmed the Group’s margins for FY Dec 2010.

Meanwhile, the profit margins of Rubberex’s household and industrial gloves divisions have also been thinning since 3Q FY Dec 2010. While we expect Rubberex to be able to pass on its heftier latex costs to its customers, with a time lag of 1-2 months for industrial gloves and 3-4 months for household gloves, persistent escalation in latex costs would prolong the recovery of this segment’s profit margin.

Against these backdrops and the stronger ringgit against the US dollar, Rubberex’s operating profit before depreciation, interest and tax descended 14.2% year-on-year (y-o-y) in FY Dec 2010, despite its stronger top line. While revenue from the household- and industrial-glove divisions surged 30% y-o-y in FY Dec 2010, this failed to compensate the 4% drop in sales of vinyl gloves, i.e. the Group’s core product. Rubberex’s pre-tax profit was also slashed from RM23.3 million to RM10.15 million y-o-y. The Group’s performance continued to deteriorate in 1Q FY Dec 2011; revenue shrank 14.3% y-o-y to RM78.31 million while operating profit before interest and tax was halved to RM3.37 million, mainly due to the aforementioned factors.

“In the near team, the operating environment is expected to remain challenging. As input prices are expected to continue rising, Rubberex’s margins are envisaged to weaken amid its limited ability to pass on the higher costs to its customers,” opines Kevin Lim, RAM Ratings’ Head of Consumer and Industrial Ratings. “Going forward, we do not expect Rubberex to take up additional borrowing this year as its expansion has been put on hold amid the current oversupply of vinyl gloves. As such, the Group’s funds from operations debt coverage is envisaged to remain around 0.2–0.3 times while its gearing ratios are seen to hover at about 0.6-0.9 times.”

Meanwhile, the rating remains supported by Rubberex’s established market positions as one of the top 5 vinyl-glove producers in the world and among the larger and more established manufacturers of household and industrial gloves in Malaysia, relatively resilient demand for vinyl disposable gloves, and its moderate balance sheet. Nonetheless, these positives are offset by the Group’s vulnerability to input price volatility and shortages in the supply of raw materials, besides its exposure to foreign-exchange risk.

The rating outlook could be revised to stable should Rubberex’s operations in both China and Malaysia demonstrate sustainable improvement in their profit margins. On the other hand, the rating could be downgraded if the operating environment continues to deteriorate and both Rubberex’s operations continue experiencing thinning margins that further erode its debt protection metrics.

Media contact
Low Pui San
(603) 7628 1051
puisan@ram.com.my