The reaffirmation of Pembinaan Mitrajaya Sdn Bhd’s (PMSB) long term rating of A-ID (A minus, Islamic Debt) and short term rating of MARC 2ID reflect the assignment of contract proceeds for the purpose of redemption of the ABBA and MUNIF facilities; the strength of the issue structure; its good track record; its competitive position; improvement in economic outlook; and the company’s improving financial position. The ratings, however, are moderated by the cyclical nature of the construction industry and the sensitivity of the company’s cash flow to adverse developments in the said industry.

The three contracts initially assigned to the facility have been completed, namely the Simpang Pulai – Kuala Berang Packages 7A and 3/2 and the construction of low cost apartments for Putrajaya Holdings Sdn Bhd (PHSB). As required under the terms of the facility agreement, PMSB has assigned the following new contracts to secure the redemption of the Islamic debt securities: Simpang Pulai – Kuala Berang 3/2A, construction of low cost houses in Putrajaya; construction of roadworks, sewer, pipelines and landscape in Putrajaya and construction of a secondary school in Bandar Tasik Kesuma.

PMSB was awarded an extension of Package 3/2, namely package 3/2A, in April 2003. This project has a contract value of RM16.11 million and is expected to be completed at the end of 2003. The package was 60% completed at end July 2003, as scheduled. Collection risk of the project is mitigated given Public Works
Department’s good payment track record for the previous package (3/2).

The construction of low cost houses in Precinct 11 and Roadwork Project in Putrajaya are still in the early construction stage with completion at 29% and 26% respectively as at May 2003. These projects are expected to be completed in early 2004. Credit strength of the project owner, PHSB, is considered excellent (rated AAA by MARC).

The construction of a secondary school in Bandar Tasik Kesuma, Semenyih, was recently completed in April 2003 as planned and PMSB has received the full payment from PWD.

Revenue rose significantly to RM261.0 million in FY2002 from RM199.6 million previously, reflecting the completion of a number of construction projects and the recognition of on-going project revenues based on percentage of completion. As at July 2003, PMSB’s outstanding order book stood at RM458.25 million, sufficient to sustain the company’s revenue base for the next two to three years. The company’s debt servicing capacity further strengthened in FY2002 aided by the surplus position in working capital. Debtholders’ interests are protected under the issue structure through the assignment of proceeds from selected projects. Despite an increase in total debt obligation in FY2002, PMSB’s debt leverage improved slightly to 1.80x in FY2002 (FY2001: 1.88x), backed by an enlarged shareholders’ funds.