KUALA LUMPUR: RAM Ratings has reaffirmed an AA2/Stable rating on APM Automotive Holdings Bhd's RM1.5 billion Islamic Medium-Term Notes (IMTN) Programme (2016/2036) and the P1 rating on its RM1.5 billion Islamic Commercial Papers Programme (2016/2023).
In a statement on Tuesday (Oct 4), the agency said the reaffirmation of the ratings reflects its expectations that APM will maintain its strong market position within the local automotive parts sector and its conservative financial profile.
“The group's operating performance is anticipated to continue to recover, broadly in line with the automotive sector. Longer-term prospects may be tested by waning consumer demand, in view of mounting economic challenges and the rising cost of living and car ownership.
“APM's solid balance sheet gives it significant financial flexibility and buffers to tide over these uncertainties,” it said.
RAM Ratings said the two programmes are subject to a combined limit of RM1.5 billion.
APM's revenue in the first half of the financial year ending December 2022 (1HFY22) grew 26.5% year-on-year to RM802.40 million, compared to RM634.48 million in 1HFY21 of financial year ended December 2021.
The lifting of almost all pandemic-related restrictions allowed the auto parts sector to step-up production and deliveries in response to strong demand from the sales tax exemptions on cars, said the statement.
“Looking ahead to the fiscal year 2024, we expect APM to maintain a net cash position and funds from operations debt coverage of above 0.50 times, even after factoring in higher debts to fund potential mergers and acquisitions,” it added.
Source : The Edge Markets