KUALA LUMPUR (Jan 6): RAM Ratings has reaffirmed the respective long- and short-term corporate credit ratings of Genting PLANTATION []s Bhd at AA2 and P1, and maintained the positive outlook on the long-term rating.
The rating agency said on Friday that Genting Plantations’ ratings were supported by its superior balance sheet, as demonstrated by its consistent net-cash position over the past decade and robust operating cashflow debt coverage of 1.50 times as at end-September 2011, as well as its strong liquidity and substantial financial flexibility.
Meanwhile, Genting Plantations’ efficient plantation management has translated into healthy earnings for the Group, it said.
On the other hand, the ratings are moderated by Genting Plantations’ increased operational risks from foreign ventures as well as its exposure to the cyclical nature of the oil-palm industry, which is characterised by the volatile prices of crude palm oil, it said.
RAM Ratings’ Head of Real Estate and CONSTRUCTION [] Ratings Shahina Azura Halip said Genting Plantations’ commendable operational and financial track records as well as healthy capital structure continued to support the positive rating outlook.
Nonetheless, Shahina said Genting Plantations’ Indonesian plantation operations have yet to be profitable given the relatively low yields for its young estates there.
“Over the next 4 years (2012-2015), Genting Plantations expects to fork out about RM750 million of capital expenditure for its Indonesian expansion; this figure may be higher as the Group also plans to venture into downstream activities.
Although details remain fluid at this juncture, such plans would mark the Group’s maiden venture into the highly competitive downstream industry,” said Shahina.
Shahina said the long-term rating may be upgraded should Genting Plantations demonstrate an established track record of successful operations in Indonesia while preserving its superior financial profile.
The rating agency said on Friday that Genting Plantations’ ratings were supported by its superior balance sheet, as demonstrated by its consistent net-cash position over the past decade and robust operating cashflow debt coverage of 1.50 times as at end-September 2011, as well as its strong liquidity and substantial financial flexibility.
Meanwhile, Genting Plantations’ efficient plantation management has translated into healthy earnings for the Group, it said.
On the other hand, the ratings are moderated by Genting Plantations’ increased operational risks from foreign ventures as well as its exposure to the cyclical nature of the oil-palm industry, which is characterised by the volatile prices of crude palm oil, it said.
RAM Ratings’ Head of Real Estate and CONSTRUCTION [] Ratings Shahina Azura Halip said Genting Plantations’ commendable operational and financial track records as well as healthy capital structure continued to support the positive rating outlook.
Nonetheless, Shahina said Genting Plantations’ Indonesian plantation operations have yet to be profitable given the relatively low yields for its young estates there.
“Over the next 4 years (2012-2015), Genting Plantations expects to fork out about RM750 million of capital expenditure for its Indonesian expansion; this figure may be higher as the Group also plans to venture into downstream activities.
Although details remain fluid at this juncture, such plans would mark the Group’s maiden venture into the highly competitive downstream industry,” said Shahina.
Shahina said the long-term rating may be upgraded should Genting Plantations demonstrate an established track record of successful operations in Indonesia while preserving its superior financial profile.
