Financial Highlights
Home / [NST] MARC affirms AAAIS (fg) rating on Masteel’s sukuk
By Azanis Shahila Aman
KUALA LUMPUR: MARC Ratings has affirmed its AAAIS(fg) rating on Malaysia Steel Works (KL) Bhd’s (Masteel) RM130.0 million Danajamin Nasional Bhd-guaranteed Sukuk Ijarah Programme with a stable outlook.
The rating agency said the rating and outlook are based on MARC Ratings’ assessment of the credit strength of Danajamin (AAA/Stable).
“This has provided unconditional and irrevocable financial guarantee insurance on the programme,” it said.
Upon completing the amalgamation exercise of Danajamin and Bank Pembangunan Malaysia Bhd (BPMB), BPMB will honour Danajamin’s obligations under the guarantees.
Accordingly, Masteel’s guaranteed sukuk will carry BPMB’s AAA/Stable rating.
Masteel’s credit profile incorporates its longstanding track record in the domestic production of steel billets and steel bars, its moderate domestic market position and the improving operational efficiency from continued investment in production technology.
The company is exposed to the volatility of steel prices and raw material costs.
The company’s financial performance improved, attributable to the higher steel bar price, for the first half of 2022 (1H22).
Meanwhile, its revenue grew by 12.8 per cent year on year (YoY) to RM894.5 million as the average selling price of domestic steel bars rose to RM3,020 per metric tonne (MT) from RM2,600 per MT in 1H21.
The normalisation of economic activities contributed to this after easing pandemic-induced restrictions.
According to MARC Rating, the outstanding under the Sukuk Ijarah Programme stood at RM90.0 million as of end-June 2022, with the subsequent repayment of RM40.0 million due on November 30, 2022.
“The company has a cash balance of RM62.1 million as of end-June 2022.
“The company’s borrowings rose to RM452.5 million as of end-June 2022 (end-2021: RM380.9 million), mainly to fund the working capital for steel production.
“The gross debt-to-equity ratio stood at 0.53 times,” it added.
