Tuesday, Sep 30, 2003
The rating affirmation of AAID for MHS Aviation Berhad’s (MHSA) Al-Bai Bithaman Ajil Islamic Serial Debt Securities (BaIDS) reflects the company’s continued dominant position in the provision of aviation services, as underlined by its ability in providing services that meet the demand for high safety standards by domestic oil and gas companies. MHSA’s exceptional track record is evident from its excellent safety record with over 230,000 fatality-free flying hours. Recently, MHSA secured a new contract from Talisman Malaysia Ltd. for the provision of helicopter services for the company’s off-shore oil and gas activities. The contract is for three years from February 2003 to January 2006.
Given the positive industry outlook and the company’s ability to manage its operations effectively, MHSA recorded a strong financial performance in FY2002. The company’s revenue, comprising long term and short term contracts, grew by 15.5% to RM196.0 in FY2002 and it is forecasted to increase to RM238.8 million in fiscal 2003. The recent fiscal year saw over two-thirds of MHSA’s revenue generated from long term contracts with major domestic oil and gas companies in Malaysia. The high proportion of long term contracts, most of which will expire two years after the full redemption of the BaIDS, provides stability and predictability to MHSA’s revenue stream.
The higher revenue also translated into an improved operating profit margin. For the second consecutive year, MHSA registered double digit profit margin of more than 20%. MHSA registered an increase in profit before tax to RM34.1 million from RM28.4 million in FY2001. Shareholders’ funds were boosted to RM123.4 million from RM98.9 million previously.
Another positive factor is the credit support provided to the BaIDS by the subordination of the RM140 million Nominal Junior Notes Issue (JNs). The affirmation of A+ID for the JNs reflects the subordinated status of the JNs in relation to the security coverage and the payment waterfall as well as the put and call option feature incorporated in the issue structure. Under the structure, the BaIDS are secured by a first charge and assignment over all existing service contract proceeds; providing a security cover of 12 times. Redemption of the JNs will only commence after the full redemption of the BaIDS in 2006, lending support to the rating of the BaIDS and mitigating the risk of cross default. A put and call option incorporated in the JNs’ issue structure will have the effect of accelerating the redemption of the JNs in the year 2009, the exercise date of the option.
Given the positive industry outlook and the company’s ability to manage its operations effectively, MHSA recorded a strong financial performance in FY2002. The company’s revenue, comprising long term and short term contracts, grew by 15.5% to RM196.0 in FY2002 and it is forecasted to increase to RM238.8 million in fiscal 2003. The recent fiscal year saw over two-thirds of MHSA’s revenue generated from long term contracts with major domestic oil and gas companies in Malaysia. The high proportion of long term contracts, most of which will expire two years after the full redemption of the BaIDS, provides stability and predictability to MHSA’s revenue stream.
The higher revenue also translated into an improved operating profit margin. For the second consecutive year, MHSA registered double digit profit margin of more than 20%. MHSA registered an increase in profit before tax to RM34.1 million from RM28.4 million in FY2001. Shareholders’ funds were boosted to RM123.4 million from RM98.9 million previously.
Another positive factor is the credit support provided to the BaIDS by the subordination of the RM140 million Nominal Junior Notes Issue (JNs). The affirmation of A+ID for the JNs reflects the subordinated status of the JNs in relation to the security coverage and the payment waterfall as well as the put and call option feature incorporated in the issue structure. Under the structure, the BaIDS are secured by a first charge and assignment over all existing service contract proceeds; providing a security cover of 12 times. Redemption of the JNs will only commence after the full redemption of the BaIDS in 2006, lending support to the rating of the BaIDS and mitigating the risk of cross default. A put and call option incorporated in the JNs’ issue structure will have the effect of accelerating the redemption of the JNs in the year 2009, the exercise date of the option.