Wednesday, Aug 03, 2005
MARC has assigned Weida (M) Bhd’s (“Weida”) RM100.0 million Murabahah Underwritten Notes/Islamic Medium-Term Notes facility ratings of MARC-1ID /A+ID which reflects, amongst others, the Group’s reputable position as a manufacturer of high density polyethylene (“HDPE”) engineering products for the water and sewerage industry; its historically strong financial performance and positive cashflow generating abilities.
Weida is an investment holding company with subsidiaries principally involved in the manufacturing and trading of HDPE engineering products for the water and sewerage industry. At present it has three manufacturing plants strategically located in Kuching, Kota Kinabalu and Nilai. The facilities are currently cumulatively operating at 10,842 MT representing a utilisation rate of 60%. The Group’s main revenue earner is the sale of its HDPE engineering products which contribute on average 88% of total revenue for the last five years. Weida was also awarded a long term contract to operate and manage a septic sludge treatment plant in Kuching, Sarawak. In addition, Weida has expanded its services via its acquisition of UTIC Services Sdn Bhd in October 2004, which specialises in trenchless pipe rehabilitation services, a relatively new field in Malaysia.
Weida’s debt to equity ratio has been consistently below one time despite its high R&D activities and operating in a capital-intensive environment. Following the issuance of the Islamic debt, the pro-forma debt to equity ratio is expected to be 0.52 times. Under MARC’s sensitivity analysis of Weida’s projected cash flow, the latter’s cash generation capacity was generally found to be strong throughout the tenure of the facility though somewhat susceptible to delays in receipts rather than an increase in borrowing costs.
Weida is an investment holding company with subsidiaries principally involved in the manufacturing and trading of HDPE engineering products for the water and sewerage industry. At present it has three manufacturing plants strategically located in Kuching, Kota Kinabalu and Nilai. The facilities are currently cumulatively operating at 10,842 MT representing a utilisation rate of 60%. The Group’s main revenue earner is the sale of its HDPE engineering products which contribute on average 88% of total revenue for the last five years. Weida was also awarded a long term contract to operate and manage a septic sludge treatment plant in Kuching, Sarawak. In addition, Weida has expanded its services via its acquisition of UTIC Services Sdn Bhd in October 2004, which specialises in trenchless pipe rehabilitation services, a relatively new field in Malaysia.
Weida’s debt to equity ratio has been consistently below one time despite its high R&D activities and operating in a capital-intensive environment. Following the issuance of the Islamic debt, the pro-forma debt to equity ratio is expected to be 0.52 times. Under MARC’s sensitivity analysis of Weida’s projected cash flow, the latter’s cash generation capacity was generally found to be strong throughout the tenure of the facility though somewhat susceptible to delays in receipts rather than an increase in borrowing costs.