MARC has assigned short and long term ratings of MARC-2ID/AID to Malaysian AE Models Holdings Berhad’s (“MAE”) proposed issuance of RM200 Million Islamic Commercial Paper/Islamic Medium Term Notes Programme. The ratings reflect MAE’s competitive position as a one-stop logistic solutions provider; its technical competency in the industry; stable order book and fairly strong financial profile. These factors are, however, moderated by the competition from low cost manufacturers in China and the company’s exposure to adverse economic factors locally as well as regionally.

MAE is listed on the Main Board of Bursa Malaysia Securities Berhad and MAE’s group of companies are involved in providing consulting services, designing, manufacturing, installation and maintenance of automated materials handling and factory automation systems. In line with the company’s expansion, the bulk of the proceeds from the proposed Islamic financing will be used as working capital while the balance will be utilised towards refinancing existing borrowings particularly the Bai Inah Facility from Bank Muamalat Malaysia Berhad.

Competition from the low cost manufacturers has provided the impetus for the Group to reposition itself as a one-stop automated materials handling system provider. As part of its strategy, MAE has expanded its marketing efforts outside Malaysia. Presently, MAE has regional offices in China, Indonesia, Thailand and Singapore as well as representative offices in Germany and Australia.

MAE’s wide range of automated materials and factory automation systems allows it to cater to the needs of

a multitude of industries. The Group has approximately RM189 million worth of projects in hand as at 30 September 2005. These contracts include maintenance and technical services contracts that would provide annual recurring income of approximately RM68.5 million per annum for a duration of at least ten years. By geographical segments, more than 90% of MAE’s current order book is from the overseas markets with China and Indonesia accounting for almost 49%.

Group revenue increased to RM186.0 million in FY2005 from RM159.5 million in the previous corresponding period. The significant increase was underlined by the continuing contribution from its trading activities which accounted for almost 80% of total revenue. The improvement in the Group revenue follows the increase in sales for bulk handling system and contract manufacturing businesses as well as increase in demand for overseas contract jobs. Consequently, profit before tax rose to RM12.6 million from RM11.5 million in FY2004. During the year, MAE’s debt-to-equity ratio improved slightly to below 1.0x due to the enlarged paid-up share capital and higher retained profits.

MAE’s base case cash flow projections indicates a robust debt service capacity with an average and minimum coverage ratio of 12.8x and 2.6x respectively. Additionally, the relatively high cash balance of RM32.0 million as at 31 May 2005, provides a degree of financial flexibility to the Group as and when it requires additional funds for working capital purposes.