RAM Ratings Upgrades & Reaffirms the Credit Quality of All Three Key Entities of the YTL Corp Group
Kuala Lumpur, Thursday 19 January 2023
RAM Ratings has upgraded or reaffirmed the credit quality of all the three key publicly listed operating entities of the YTL Group. YTL Corp and YTL Power's long term outlook was upgraded to stable while Malayan Cement was reaffirmed as stable.
The Executive Chairman of YTL Corp Group, Tan Sri (Sir) Francis Yeoh, said, "We are blessed that RAM has both upgraded and reaffirmed our credit rating in all our three listed operating entities. This is due to the diligence and continual focus of the Board and the staff to navigate through challenging circumstances. We have now put all our businesses on a much stronger footing coming out of the Covid pandemic crisis."
RAM noted the outlook revision reflects earnings improvement, better dividend paying capacities of key operating units and the turnaround of loss-making divisions post-pandemic. These factors are supported by easing debts at its key utility arm, YTL Power, following the cash boost from the successful disposal of its stake in ElectraNet Pty Ltd. YTL Corp's combined operating cashflow (OCF) to net debt coverage levels are projected to be above 0.30 times, commensurate with the AA1 ratings. In FY June 2022, combined OCF to net debt coverage continued to exceed expectations, coming in at 0.27 times against the estimated 0.15 times.
RAM highlighted that the Group's ability to monetise assets and investments to support post-pandemic earnings recovery supports the benefit given to its robust financial flexibility in its assessment.
RAM further noted that liquidity profile stayed superior, backed by the substantial RM6.83 bil of unencumbered cash reserves under YTLPI and a RM742.37 mil company-level cash balance. The ratings also consider YTL Corp's strong financial flexibility vis-à-vis company-level debt of RM6.60 bil as at end-June 2022. Its estimated net realisable asset value is taken into account in view of the sizeable and increasing value of YTLPI's regulated assets over time and the Group's ability to generate cashflows from divestments of stakes in these entities. These factors, along with the Group's diversified businesses and strong operating track record support the AA1 ratings.
Links to press releases from RAM Ratings:
RAM Ratings revises long-term outlook on YTL Corp to stable on improved earnings and credit quality, reaffirms AA1 ratings (https://www.ram.com.my/pressrelease/?prviewid=6226)
RAM Ratings revises outlook on YTL Power to stable on improved earnings and credit quality, reaffirms AA1 ratings (https://www.ram.com.my/pressrelease/?prviewid=6225)
RAM Ratings reaffirms sukuk ratings of Malayan Cement & Kedah Cement