Wednesday, Aug 01, 2001
The affirmation of Pembinaan Mitrajaya Sdn Bhd’s (PMSB) Islamic debt ratings reflect the assignment of specific contract proceeds for the purpose of the redemption of the ABBA and MUNIF facilities; manageable risks associated with its various projects; and the company’s improving financial position. These factors are, however, tempered by the slow-down in the general economy; continued excess supply in all property sub-sectors; and the company’s limited financial flexibility.
PMSB’s core businesses are primarily in the civil engineering and construction sectors. Government related projects accounted for a large portion of its order book. The size of this order book as at June 2001 was RM491 million. Against the backdrop of excess capacity in all property sub-sectors the company’s operating environment remains intensely competitive with the resultant squeeze on margins. Construction activities are expected to be subdued in the near term, mainly supported by infrastructure and utility projects.
PMSB’s contracted works under packages 3/2 and 7A of the Simpang Pulai-Kuala Berang highway are proceeding satisfactorily. The completion date for package 3/2 has been extended to July 2003 (from July 2002) arising out of a revision in project design by the Public Works Department (PWD). The stage of completion of package 7A is 41.27% against planned completion of 39.84% at year end 2000. PWD’s payment track record continues to be good with no significant delays in payments. The construction of low cost apartments in Precinct 9 of Putrajaya is ahead of schedule with progress billings promptly settled by Putrajaya Holdings Bhd. PMSB is also the contractor for the mixed development project in Puchong, undertaken by Primaharta Development Sdn Bhd (PDSB) (a subsidiary of Mitrajaya Holding Berhad). Located beside established housing and industrial estates, sales of the various property products have been good with an overall take-up rate of 80.7%. The scheduled completion date of the project is 2005.
Revenue rose 15.08% in FY2000, reversing the downward trend in the previous two years. But higher operating and interest costs pared PMSB’s profit before tax to RM33.04 million; 23.8% lower than that in FY1999. The increase in interest costs was due to the enlarged borrowing base of RM75.6 million, after the issue of the ABBA and MUNIF securities in FY2000. Inter-company advances to PDSB to fund the development of its project in Puchong continued to strain PMSB’s cash flow, with the latter recording its third consecutive year of deficit. Noteholders’/bondholders’ interests are nevertheless somewhat protected under the issue structure through the assignment of contract proceeds from the Simpang Pulai-Kuala Berang highway and the construction of low cost apartments for Putrajaya Holdings Bhd. PMSB’s free cash flow is expected to strengthen, going forward, with no major capital expenditure programme planned for the next few years. The 62.4% growth in shareholders’ funds to RM40.8 million helped to moderate the increase in debt leverage to 1.85x in FY2000 (FY99: 0.18x). This is still within the cap of 4.0x imposed under the issue structure.
Limited financial flexibility is provided by the company’s unutilized banking facilities which stood at RM88.7 million as at 15 March 2001, unencumbered assets with a net book value of RM5.0 million and indirect access to capital markets through its public-listed holding company, Mitrajaya Holdings Bhd.
PMSB’s core businesses are primarily in the civil engineering and construction sectors. Government related projects accounted for a large portion of its order book. The size of this order book as at June 2001 was RM491 million. Against the backdrop of excess capacity in all property sub-sectors the company’s operating environment remains intensely competitive with the resultant squeeze on margins. Construction activities are expected to be subdued in the near term, mainly supported by infrastructure and utility projects.
PMSB’s contracted works under packages 3/2 and 7A of the Simpang Pulai-Kuala Berang highway are proceeding satisfactorily. The completion date for package 3/2 has been extended to July 2003 (from July 2002) arising out of a revision in project design by the Public Works Department (PWD). The stage of completion of package 7A is 41.27% against planned completion of 39.84% at year end 2000. PWD’s payment track record continues to be good with no significant delays in payments. The construction of low cost apartments in Precinct 9 of Putrajaya is ahead of schedule with progress billings promptly settled by Putrajaya Holdings Bhd. PMSB is also the contractor for the mixed development project in Puchong, undertaken by Primaharta Development Sdn Bhd (PDSB) (a subsidiary of Mitrajaya Holding Berhad). Located beside established housing and industrial estates, sales of the various property products have been good with an overall take-up rate of 80.7%. The scheduled completion date of the project is 2005.
Revenue rose 15.08% in FY2000, reversing the downward trend in the previous two years. But higher operating and interest costs pared PMSB’s profit before tax to RM33.04 million; 23.8% lower than that in FY1999. The increase in interest costs was due to the enlarged borrowing base of RM75.6 million, after the issue of the ABBA and MUNIF securities in FY2000. Inter-company advances to PDSB to fund the development of its project in Puchong continued to strain PMSB’s cash flow, with the latter recording its third consecutive year of deficit. Noteholders’/bondholders’ interests are nevertheless somewhat protected under the issue structure through the assignment of contract proceeds from the Simpang Pulai-Kuala Berang highway and the construction of low cost apartments for Putrajaya Holdings Bhd. PMSB’s free cash flow is expected to strengthen, going forward, with no major capital expenditure programme planned for the next few years. The 62.4% growth in shareholders’ funds to RM40.8 million helped to moderate the increase in debt leverage to 1.85x in FY2000 (FY99: 0.18x). This is still within the cap of 4.0x imposed under the issue structure.
Limited financial flexibility is provided by the company’s unutilized banking facilities which stood at RM88.7 million as at 15 March 2001, unencumbered assets with a net book value of RM5.0 million and indirect access to capital markets through its public-listed holding company, Mitrajaya Holdings Bhd.