Tuesday, Apr 22, 2003
MARC has affirmed Road Builder (M) Holdings Bhd’s corporate credit rating of A+ (single A plus). The rating affirmation reflects the good track record exhibited by the group in all its major business divisions, the group’s competitive position in the construction business, experienced management team who are aggressive in their effort to broaden the group’s revenue base, strong financial profile underlined by the outstanding revenue and profitability growth, satisfactory debt leverage measures and strong financial flexibility. The rating is, however, moderated by the inherent cyclicality of the construction and property industry.
Road Builder (M) Holdings Bhd was incorporated in 1992 and was dormant until it acquired Road Builder (M) Sdn Bhd and transformed itself into an investment holding company. Following the acquisition, Road Builder (M) Holdings Bhd was then listed on the Kuala Lumpur Stock Exchange in 1993. The group is principally involved in four broad core businesses namely construction, property development, toll concessions and port operations with ancillary businesses in trading of building materials and hotel and club operations. The group draws its competitive strength from its strong business position in the construction business backed by an outstanding track record in completing quality construction works in a timely manner. The group’s ability to undertake a whole range of construction works coupled with its strong financial profile allows it to compete in a challenging business environment. Road Builder (M) Holdings Bhd’s increasing participation in construction projects outside Malaysia, particularly in India, effectively diversifies away the inevitable risk of a slowdown in the local construction industry. In the near-to-medium term, a sizeable portion of the group’s revenue is expected to come from its construction arm and with an outstanding order book of around RM1.7 billion as at 31 December 2002, it should be adequate to sustain the group’s revenue base for the next three years.
Ventures into non construction related activities such as property development, tolling concessions and port operations should assist the group in diversifying its revenue streams. For FY2002, these three divisions contributed a combined 30.6% of the group’s total revenue. Fiscal year 2002 also saw the first full year contribution from its port division, upon completion of Road Builder (M) Holdings Bhd acquisition of the remaining 40% equity interest in Kuantan Port Consortium Sdn Bhd, which accounted for 8.3% and 13.9% of the group’s revenue and profit before tax respectively. Going forward, contributions from the tolling and port operations divisions are expected to increase further especially when tolling at the New Pantai Expressway commences in 2004. The group is optimistic on the outlook of the tolling and port operations divisions and expects both these divisions to increase their contribution to the group’s revenue to about 45% by year 2005 against 12% in FY2002.
FY2002 also witnessed Road Builder (M) Holdings Bhd’s best ever financial performance in its 10-year history, posting record revenues of almost RM1 billion and profit before tax of RM217.4 million. Profitability wise, the group has been able to maintain a respectable double digit operating profit margin over the last five years. Following a dip in the group’s operating profit margin in the previous financial year, the group bounced back to record an improved operating profit margin of 19.1%. In FY2002, the group’s total borrowings rose from RM396.6 million in FY2001 to approximately RM1.2 billion. Excluding the government support loan, the group’s total borrowing for FY2002 was RM922.5 million an increase of 213% from the preceding financial year’s total borrowings of RM294.7 million. Even though there was a significant increase in total borrowings, the huge debt was comfortably supported by the group’s sizable equity position. Cash flow coverage improved significantly in FY2002 on the back of positive operating cash flow after two consecutive years of cash flow deficits.
Road Builder (M) Holdings Bhd’s healthy cash bank balances, growing capital base, sizeable amount of unutilized banking facilities and good reputation in the market accord the group with good financial flexibility.
Road Builder (M) Holdings Bhd was incorporated in 1992 and was dormant until it acquired Road Builder (M) Sdn Bhd and transformed itself into an investment holding company. Following the acquisition, Road Builder (M) Holdings Bhd was then listed on the Kuala Lumpur Stock Exchange in 1993. The group is principally involved in four broad core businesses namely construction, property development, toll concessions and port operations with ancillary businesses in trading of building materials and hotel and club operations. The group draws its competitive strength from its strong business position in the construction business backed by an outstanding track record in completing quality construction works in a timely manner. The group’s ability to undertake a whole range of construction works coupled with its strong financial profile allows it to compete in a challenging business environment. Road Builder (M) Holdings Bhd’s increasing participation in construction projects outside Malaysia, particularly in India, effectively diversifies away the inevitable risk of a slowdown in the local construction industry. In the near-to-medium term, a sizeable portion of the group’s revenue is expected to come from its construction arm and with an outstanding order book of around RM1.7 billion as at 31 December 2002, it should be adequate to sustain the group’s revenue base for the next three years.
Ventures into non construction related activities such as property development, tolling concessions and port operations should assist the group in diversifying its revenue streams. For FY2002, these three divisions contributed a combined 30.6% of the group’s total revenue. Fiscal year 2002 also saw the first full year contribution from its port division, upon completion of Road Builder (M) Holdings Bhd acquisition of the remaining 40% equity interest in Kuantan Port Consortium Sdn Bhd, which accounted for 8.3% and 13.9% of the group’s revenue and profit before tax respectively. Going forward, contributions from the tolling and port operations divisions are expected to increase further especially when tolling at the New Pantai Expressway commences in 2004. The group is optimistic on the outlook of the tolling and port operations divisions and expects both these divisions to increase their contribution to the group’s revenue to about 45% by year 2005 against 12% in FY2002.
FY2002 also witnessed Road Builder (M) Holdings Bhd’s best ever financial performance in its 10-year history, posting record revenues of almost RM1 billion and profit before tax of RM217.4 million. Profitability wise, the group has been able to maintain a respectable double digit operating profit margin over the last five years. Following a dip in the group’s operating profit margin in the previous financial year, the group bounced back to record an improved operating profit margin of 19.1%. In FY2002, the group’s total borrowings rose from RM396.6 million in FY2001 to approximately RM1.2 billion. Excluding the government support loan, the group’s total borrowing for FY2002 was RM922.5 million an increase of 213% from the preceding financial year’s total borrowings of RM294.7 million. Even though there was a significant increase in total borrowings, the huge debt was comfortably supported by the group’s sizable equity position. Cash flow coverage improved significantly in FY2002 on the back of positive operating cash flow after two consecutive years of cash flow deficits.
Road Builder (M) Holdings Bhd’s healthy cash bank balances, growing capital base, sizeable amount of unutilized banking facilities and good reputation in the market accord the group with good financial flexibility.