Tuesday, Jun 08, 2004
MARC has assigned a rating of A+ID (A plus, Islamic Debt) to Ingress Sukuk Berhad’s (ISB) proposed RM160.0 million Sukuk Al Ijarah Issuance. ISB was incorporated by its holding company, Ingress Corporation Berhad (Ingress), as a special purpose vehicle to facilitate the execution of the sale and leaseback of Ingress’ identified assets for the Sukuk Al Ijara Issuance.
The assigned rating reflects Ingress’ track record as one of the leading local automotive component manufacturers with a diversified customer and geographical distribution; and above average financial results characterized by its favourable operating profit margin. Moderating factors include the vulnerability of the automotive industry and the manufacturing sector to economic swings and growing competition arising from trade liberalization.
Ingress, incorporated in 1999, is currently one of the domestic manufacturers of roll-formed mouldings, weatherstrips and the sole manufacturer of door sash and complete door assembling. In the ASEAN region, the Group is one of the two manufacturers of door sash assemblies and the only automotive vendor manufacturing complete door assemblies. Ingress supplies its products to renowned car manufacturers such as General Motors/Isuzu, Ford/Mazda, Mitsubishi and Honda. On the local front, it primarily supplies to Perodua, which has a niche market in the compact car section, and Proton. The Group’s operations span across three countries – Malaysia, Thailand and Indonesia; affording it direct access to the region’s fastest growing automotive markets.
The novelty of this issuance is that the Sukukholders hold an undivided proportionate beneficial ownership of the Assets and the rights, title, interest and benefit under all the transaction documents as opposed to only having the rights to receive rentals from the leased assets.
Over the past four fiscal years, Ingress’ operating profit margin averaged 20.3%, although the margin for FY2004 dropped to 15.0%; reflective of the drop in vehicle sales in 2003. Ingress’ debt servicing capability has been strong; with CFO interest and debt service cover ratio averaging 8.1 times and 10.5 times respectively over the FY2000 to FY2003 period. Base case cash flow projected an average and minimum DSCR of 2.5 times and 1.7 times respectively over the tenure of the facility.
Ingress’ debt-leverage appears manageable given the capital intensive nature of the business. Ingress’ shareholders’ funds more than doubled in the last five years from RM73.9 million in FY2000 to RM163.3 million in FY2004. Pro-forma debt-to-equity ratio following the issuance of the RM160 million Sukuk Al Ijarah is 1.1 times.
The assigned rating reflects Ingress’ track record as one of the leading local automotive component manufacturers with a diversified customer and geographical distribution; and above average financial results characterized by its favourable operating profit margin. Moderating factors include the vulnerability of the automotive industry and the manufacturing sector to economic swings and growing competition arising from trade liberalization.
Ingress, incorporated in 1999, is currently one of the domestic manufacturers of roll-formed mouldings, weatherstrips and the sole manufacturer of door sash and complete door assembling. In the ASEAN region, the Group is one of the two manufacturers of door sash assemblies and the only automotive vendor manufacturing complete door assemblies. Ingress supplies its products to renowned car manufacturers such as General Motors/Isuzu, Ford/Mazda, Mitsubishi and Honda. On the local front, it primarily supplies to Perodua, which has a niche market in the compact car section, and Proton. The Group’s operations span across three countries – Malaysia, Thailand and Indonesia; affording it direct access to the region’s fastest growing automotive markets.
The novelty of this issuance is that the Sukukholders hold an undivided proportionate beneficial ownership of the Assets and the rights, title, interest and benefit under all the transaction documents as opposed to only having the rights to receive rentals from the leased assets.
Over the past four fiscal years, Ingress’ operating profit margin averaged 20.3%, although the margin for FY2004 dropped to 15.0%; reflective of the drop in vehicle sales in 2003. Ingress’ debt servicing capability has been strong; with CFO interest and debt service cover ratio averaging 8.1 times and 10.5 times respectively over the FY2000 to FY2003 period. Base case cash flow projected an average and minimum DSCR of 2.5 times and 1.7 times respectively over the tenure of the facility.
Ingress’ debt-leverage appears manageable given the capital intensive nature of the business. Ingress’ shareholders’ funds more than doubled in the last five years from RM73.9 million in FY2000 to RM163.3 million in FY2004. Pro-forma debt-to-equity ratio following the issuance of the RM160 million Sukuk Al Ijarah is 1.1 times.