MARC has reaffirmed the ratings of Atlan Holdings Berhad’s (Atlan) RM90 Million Murabahah Underwritten Notes Issuance Facility/ Islamic Medium Term Notes (MUNIF/ IMTN) and RM40 million Al’-Bai Bithaman Ajil Islamic Debt Securities (BaIDS) facilities at MARC-2ID and AID (A flat, Islamic debt). The ratings affirmation reflects Atlan’s diversified business and good competitive position, further strengthened by the recent acquisitions. The ratings are, however, moderated by any adverse external developments.

Atlan is an investment holding company, with subsidiaries involved in manufacturing and trading of precision mechanical products, tools and dies, duty free retail shops and hospitality.

Atlan’s manufacturing division serves the needs of a wide range of industries such as electrical and electronics, computer, automotive, medical devices and others. As Atlan’s products are customised to its client’s specifications, the risk of clients switching to other manufacturers is considered low. Atlan, however, is still exposed to the global electronics and electrical environment. Joint effort in areas such as marketing, research and development, etc. with United Industries, a subsidiary of Naluri Berhad (Naluri), will further enhance the operations of this division.

Atlan’s involvement in the retail industry is through
its subsidiary Emas Kerajang Sdn Bhd (EKSB) which owns and operates a duty free complex at Pekan Padang Besar, Perlis. Through its stake in Sriwani Holdings Berhad (Sriwani) via Naluri, Atlan is the largest and only licensed duty-free operator at the Malaysian-Thai border on the West Malaysian side; monopolising tourist flows through the Padang Besar and Bukit Kayu Hitam entry points. The operating environment, nevertheless, is exposed to the presently slow recovering state of the tourism industry.

With the establishment of Blakes Management Ltd. in November 2004, Atlan will now be directly involved in the operating of Blakes Hotel, thus receiving income from operations.

The recent acquisition process has benefited the Atlan group as reflected in the commendable financial results in FY2005 and FY2004. The Retail and Trading segment emerged as the main revenue contributor of Atlan followed by the Manufacturing segment.

Atlan’s debt leverage increased in FY2005 mainly due to the issuance of the MUNIF/ IMTN and BaIDS, albeit still lower than the covenanted level of 1.5 times. Atlan’s cash flow protection measures improved during the year and offers sufficient protection to noteholders at current rating levels.