Wednesday, Jun 26, 2002
Bumi Armada Navigation Sdn Bhd (BAN)’s ratings have been upgraded to MARC-1ID / AA-ID (double A minus Islamic Debt) from MARC-1ID / AID in respect of the company’s RM80 million Murabahah Notes Issuance Facility / Islamic Medium-Term Notes. The ratings reflect the company’s competitive position in the area of providing marine transportation, tanker operations and support services for the offshore oil and gas industry. Its long-term contracts with leading oil and gas multinationals, high vessel utilization rates and good safety and environmental operating track record contribute to the company’s continued dominance in servicing this segment of the oil and gas sector. The company’s financial profile also benefits from charter proceeds that lend an element of stability and predictability in its revenue stream. These ratings are, however, moderated by BAN’s dependence on the oil and gas sector for its growth prospects.
With its current fleet of 33 offshore vessels, BAN is a leading player in the provision of marine transportation, tanker operations and support services for the offshore oil and gas industry. The company’s revenue, mainly derived from charter contracts, continued on an upward trend reaching RM236.80 million in FY2001 (FY2000: RM164.8 million). Charter contracts are entered into with multinational oil companies such as PETRONAS Carigali, Sarawak Shell, Shell Gas Eastern and Esso Production Malaysia. The average tenures of the contracts are for three years, with a high likelihood of renewal given the group’s satisfactory performance, good safety track record and well-maintained and specialized vessels. Revenue received in foreign currencies accounted for about 20% of the current total charter income, providing a natural hedge against BAN’s foreign denominated expenses.
BAN‘s operating environment is linked to developments in the oil and gas industry. The outlook for oil service companies, particularly those engaged in vessel chartering and oil/gas transportation is still positive given the massive investments coming onstream in the next three to five years. BAN’s fleet of vessels together with its engineering and maintenance support capability enable the company to offer total service packages to its clients. Over the years, the group received various safety awards from international oil and gas companies in recognition of the quality and reliability of services provided.
Noteholders’ interests are protected through the assignment of charter contracts and related proceeds in respect of six vessels directly into a sinking fund to be utilized for debt servicing. Expired contracts are required to be immediately replaced with those of equal value.
The BAN group’s pre-tax profit rose 14.1% to RM63.7 million in FY2001 on the back of the increased revenue. Despite falling to 37.3% in that fiscal year, operating profit margin is projected to average over 40% for the remaining tenure of the facility. Cash flow protection measures are strong, underpinned by the stable stream of charter proceeds and the good payment record of the oil companies. The gradual reduction of debt coupled with accumulation of retained earnings have helped to reduce BAN’s debt leverage from 6.75 times in 1998 to around 1 time in FY2001. Financial flexibility is good, backed by the group’s healthy recurring cash flows, unutilized credit facility and availability of unencumbered vessels.
With its current fleet of 33 offshore vessels, BAN is a leading player in the provision of marine transportation, tanker operations and support services for the offshore oil and gas industry. The company’s revenue, mainly derived from charter contracts, continued on an upward trend reaching RM236.80 million in FY2001 (FY2000: RM164.8 million). Charter contracts are entered into with multinational oil companies such as PETRONAS Carigali, Sarawak Shell, Shell Gas Eastern and Esso Production Malaysia. The average tenures of the contracts are for three years, with a high likelihood of renewal given the group’s satisfactory performance, good safety track record and well-maintained and specialized vessels. Revenue received in foreign currencies accounted for about 20% of the current total charter income, providing a natural hedge against BAN’s foreign denominated expenses.
BAN‘s operating environment is linked to developments in the oil and gas industry. The outlook for oil service companies, particularly those engaged in vessel chartering and oil/gas transportation is still positive given the massive investments coming onstream in the next three to five years. BAN’s fleet of vessels together with its engineering and maintenance support capability enable the company to offer total service packages to its clients. Over the years, the group received various safety awards from international oil and gas companies in recognition of the quality and reliability of services provided.
Noteholders’ interests are protected through the assignment of charter contracts and related proceeds in respect of six vessels directly into a sinking fund to be utilized for debt servicing. Expired contracts are required to be immediately replaced with those of equal value.
The BAN group’s pre-tax profit rose 14.1% to RM63.7 million in FY2001 on the back of the increased revenue. Despite falling to 37.3% in that fiscal year, operating profit margin is projected to average over 40% for the remaining tenure of the facility. Cash flow protection measures are strong, underpinned by the stable stream of charter proceeds and the good payment record of the oil companies. The gradual reduction of debt coupled with accumulation of retained earnings have helped to reduce BAN’s debt leverage from 6.75 times in 1998 to around 1 time in FY2001. Financial flexibility is good, backed by the group’s healthy recurring cash flows, unutilized credit facility and availability of unencumbered vessels.