The ratings of Nam Fatt Corporation Bhd’s (Nam Fatt) RM250 million Islamic Commercial Paper/Islamic Medium Term Notes Programme have been affirmed at MARC-1ID /A+ID with a stable outlook, premised on the tight issue structure governing the facility, with strict guidelines for drawdown and restrictions on the type of contracts that the facility can be availed upon, including clearance from MARC that such contracts will not have a negative impact on the rating. Additionally, proceeds from approved contracts will be ringfenced, with note holders having priority of payment. Moderating factors however stem from sovereign risks associated with some of Nam Fatt’s overseas contracts and the accompanying performance risks arising therefrom.

Nam Fatt, which is listed on the Main Board of Bursa Malaysia, currently has four main business lines, which are construction & engineering, property development, leisure and manufacturing. Its focus is on two areas, namely construction & engineering and property development. As at 29 August 2006, the Group’s outstanding order book stood at approximately RM639.2 million comprising about 39% domestic projects and the rest foreign. Nam Fatt, has to date, completed various projects for the Government, PETRONAS-related companies, and Putrajaya Holdings Sdn Bhd (Putrajaya). The Group established a niche in the oil and gas industry after successfully completing several petrochemical and oil facilities projects such as the KR2 aromatics plant in Kertih in 1999 and The Malaysia Olefins Plant in 2001. Notable on-going projects include one awarded by the National Housing Authority in Thailand for the construction of low cost apartments in Bangkok valued at RM273.0 million and one for the construction of Government quarters awarded by Putrajaya Holdings Berhad valued at RM88.1 million.

For FYE2005, the Group’s profits have decreased despite recording higher revenue largely due to the non recognition of profits from an ongoing project in Sudan, the Melut Basin project, which is facing additional costs incurred for variation orders and is pending variation order claims. MARC is of the view that resolution of these claims will be protracted. Noteworthy, the Sudan Melut project is financed independently and not under the programme. The Group’s financial position, affected by the cost overruns on the Sudan Melut Basin project will be dependant on its existing order book to alleviate the situation. Evident of its affected financial position, the Group’s operating margins have decreased to 4.4% in FYE2005 (FYE2004: 7.2%). For FYE2005, the Group’s net cash flow from operations have decreased to RM17.6 million (FYE2004: RM51.7 million) mainly due to the increase in trade receivables from the Sudan Melut Basin project and the Gerbang Perdana CIQ project. On a positive note, Nam Fatt’s leverage levels continue to remain low.