Published: Tuesday February 5, 2013 MYT 3:28:00 PM
UMW’s capex to hit RM4b over next 3 years, says RAM Ratings
The rating agency said on Tuesday of the RM4bil, about RM2.6bil was to expand its oil and gas (O&G) division.
RAM Ratings' head of consumer & industrial ratings Kevin Lim said the capex of its other divisions was expected to be sufficiently funded by internal cash. However, its O&G segment would rely on a mix of debt and equity.
“Nonetheless, UMW has expressed its intention of keeping its gearing ratio in the region of 0.5 times," Lim said, adding to achieve this target, UMW would likely raise this funding mainly through equity.
RAM Ratings issued the statement after the finalisation of transaction documents and it assigned a final AAA long-term rating to UMW's proposed RM2bil Islamic medium-term notes programme (2013/2028) while the rating had a stable outlook.
To recap, UMW assembles and distributes Toyota vehicles, trading of heavy and industrial equipment (Komatsu, Toyota, Case and Bomag), provision of oil and gas (O&G) services (with drilling and oil-field services as core offerings), manufacture of automotive parts, and distribution of lubricants (Pennzoil and Repsol).
RAM Ratings said the rating predominantly reflected UMW's strong market position and solid financial profile.
UMW's 51%-owned UMW Toyota Motor Sdn Bhd distributes the Toyota marque that leads the non-national segment of the Malaysian automotive industry.
Toyota accounted for 14.49% of the total industry volume as at end-2011; its best-selling models are Vios, Camry, Hiluxand Hiace - the most popular brands in their respective segments.
The group's associate, Perusahaan Otomobil Kedua Sdn Bhd (Perodua), has the lion's share of "A segment" mini cars through the Viva.
The UMW Group is also a market leader in the domestic heavy- and industrial-equipment segments via best sellers Komatsu and Toyota, respectively.
In the O&G sector, UMW and its local peers also benefit from the favourable policies of the Malaysian Government and Petroliam Nasional Bhd(Petronas), which are designed to promote and develop domestic O&G players.
RAM Ratings said given UMW's ownership of jack-up drilling rigs typically used at relatively low depths, the group would benefit from the development of marginal oil fields.