Just in:
Sharjah Elevates Real‑Estate Platform with New Digital Portal // Record Global Interest Drives CDB’s Dual‑Currency Bond Triumph // Qingzhen’s Zhanjie Town Leverages Ecological Resources to Drive Industrial Upgrading and Integrate Culture and Tourism for Rural Revitalization // Galaxy AI Elevates On‑Device Intelligence with Privacy at Core // OPEC+ Eyes Pause in Production Rises After September Surge // Nigeria’s Coastal Highway Passes $747 m Funding Milestone // Stonepeak Secures Strategic Co-Control of IFCO Stake // Nvidia is the dream stock of our lifetime! // Abu Dhabi’s Masdar and Iberdrola Back £5 Billion UK Offshore Wind Venture // Can India Emerge As The Trusted Leader Of Global South Like Earlier Years? // Ten Tips for a Healthy Summer Garden // Tokyo Real Estate Set for $75 Million Blockchain Shake‑Up // ICONSIAM Showcases Thai Creativity to the World with “Lost in DOMLAND” — Reinforcing Its Role as a Must-Visit Global Art Destination // IIT Delhi and TeamLease EdTech Kick‑start AI for Healthcare Executive Programme // TÜV SÜD Appoints Interim Leadership Following CEO Transition // BRICS Pledge Cooperation, Not Confrontation With U.S. // BoE charts new wholesale terrain for stablecoins and tokenised assets // Dong Yuhui’s Fujian Journey: The Sea’s Lesson – 30% Destiny, 70% Determination // ADNOC Gas Signs $400 Million LNG Deal with SEFE // Anhui Unveils Teaser for 2025 World Manufacturing Convention, Extending a Global Invitation to Innovate Together //

MARC affirms its AAA(FG) rating on KMCOB capital's guaranteed serial bonds of up to RM320 million

06 January 2017

MARC has affirmed its AAA(fg) rating on KMCOB Capital Berhad’s (KMCOB) guaranteed serial bonds of up to RM320.0 million with a stable outlook. The rating and outlook reflect the unconditional and irrevocable financial guarantee provided by Danajamin Nasional Berhad (Danajamin), which carries MARC’s insurer financial strength rating of AAA and counterparty credit ratings of AAA/MARC-1. As at end-December 2016, KMCOB has an outstanding amount of RM105.0 million under the guaranteed serial bonds.

ADVERTISEMENT

KMCOB is a wholly-owned funding vehicle of Scomi Oilfield Limited (SOL), and is reliant on the financial strength of its parent to meet its financial obligations. SOL, which is a wholly-owned subsidiary of Scomi Energy Services Bhd (SESB) and an indirect 65.7%-owned subsidiary of Scomi Group Bhd, mainly provides drilling fluids (DF) and drilling waste management (DWM) services for the upstream segment of the oil and gas industry. SOL’s business mix continues to be dominated by the DF segment, which contributes about 60% of its consolidated revenue.

SOL’s credit profile has continued to come under pressure on the back of lower drilling activities as reflected by the decline of operational rigs in recent years, standing at 1,561 as at end-9M2016 (9M2015: 2,439). MARC also notes that the rig count has generally decreased across all regions including the Middle East. SOL’s active rig count globally stood lower at 22 at end-September 2016 (end-March 2016: 35). Against this backdrop, SOL registered a revenue decline of 33.2% y-o-y to US$229.6 million and pre-tax profit decrease of 54.3% y-o-y to US$15.0 million for financial year ended March 31, 2016 (FY2016).

MARC expects SOL’s business operations to remain soft over the near term. While SOL’s order book remains fairly large at US$1.11 billion at end-FY2016, the rating agency is of the view that contract execution could be delayed given the still challenging environment for exploration activities, although the recent recovery in oil prices could provide some nascent recovery to drilling activities. Of its order book, domestic contracts accounted for 70.8%, or US$784.6 million.

Advertisement

In response to the tough conditions, SOL has continued with its cost rationalisation initiative, resulting in a 17.6% decline in operating cost during FY2016. Accordingly, this moderated the impact on SOL’s operating profit margin, which declined to 9.4% from 11.8% in the previous corresponding period. Cash flow from operations (CFO), however, fell slightly by 4.2% y-o-y to US$33.7 million, while free cash flow (FCF) increased to US$31.1 million (FY2015: US$21.6 million) on the back of lower net capital expenditure of US$3.8 million in FY2016 (FY2015: US$15.2 million). Over the near term, the cash flow position could come under further pressure as declining revenue translates into lower cash conversion.

ADVERTISEMENT

SOL’s total borrowings reduced sharply to US$77.0 million as at FY2016 (FY2015: US$117.6 million) due to repayments and unrealised gain from exchange rate translation as the US dollar strengthened against the Malaysian ringgit. As a result, debt-to-equity stood lower at 0.77x (FY2015: 1.17x). Based on SOL’s current borrowing position, SOL has a repayment of US$37.9 million (excluding revolving credits) over the next 12 months, of which RM55.0 million is due in December 2017. SOL’s cash and bank balances which stood at US$21.2 million as at end-FY2016, and trade and other receivables provide sufficient liquidity to meet its upcoming debt repayment.

As the rating and outlook hinge on the irrevocable and unconditional guarantee provided by Danajamin, any changes on KMCOB’s rating will be primarily driven by a revision of Danajamin’s credit strength.

-Ends-

Contacts: Norehan Ikhlas, +603-2082 2257/ [email protected] 
Sharidan Salleh, +603-2082 2254/ [email protected].

[This announcement is available in the MARC corporate homepage at https://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.

© 2017 Malaysian Rating Corporation Berhad

© Press Release 2017

© Copyright Zawya. All Rights Reserved.

Via Zawya


Notice an issue?

Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.


ADVERTISEMENT
Just in:
Stonepeak Secures Strategic Co-Control of IFCO Stake // IIT Delhi and TeamLease EdTech Kick‑start AI for Healthcare Executive Programme // OPEC+ Eyes Pause in Production Rises After September Surge // Dong Yuhui’s Fujian Journey: The Sea’s Lesson – 30% Destiny, 70% Determination // Abu Dhabi’s Masdar and Iberdrola Back £5 Billion UK Offshore Wind Venture // Behomes Launches Behomes Hub – Cashback & Networking App for Real Estate Professionals // Celebratory 911 Club Coupe Marks Half-Century Porsche Partnership // Ten Tips for a Healthy Summer Garden // Sharjah Elevates Real‑Estate Platform with New Digital Portal // BRICS Pledge Cooperation, Not Confrontation With U.S. // “Eternal City” Pompeii Exhibition Opens in Hunan, Marking New Sino-Italian Cultural Exchange // Coffee Chains Join Bitcoin Mania with Bold Treasury Moves // ADNOC Gas Signs $400 Million LNG Deal with SEFE // Anhui Unveils Teaser for 2025 World Manufacturing Convention, Extending a Global Invitation to Innovate Together // Galaxy AI Elevates On‑Device Intelligence with Privacy at Core // Tokyo Real Estate Set for $75 Million Blockchain Shake‑Up // TÜV SÜD Appoints Interim Leadership Following CEO Transition // Results of the ixCrypto Index Series Quarterly Review (2025 Q2) & IX Digital Asset Industry Index Series Half Yearly Review (2025 1H) // Musk Alleges Grok Was Misled and Predicts Tech Breakthroughs // Qingzhen’s Zhanjie Town Leverages Ecological Resources to Drive Industrial Upgrading and Integrate Culture and Tourism for Rural Revitalization //