RAM Ratings assigns AA3(s)/P1(s) ratings to proposed ICP/IMTN programme under Gamuda, reaffirms existing ratings

Published on 17 Dec 2019.

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RAM Ratings has assigned AA3(s)/stable/P1(s) ratings to Gamuda Land (T12) Sdn Bhd’s proposed Islamic MTN/Islamic CP Programme; the Programme features an irrevocable and unconditional guarantee from Gamuda Berhad (or the Group). RAM has also reaffirmed the AA3/stable/P1 ratings of the existing debt programmes under Gamuda.

Table 1: Issue ratings of Gamuda and wholly owned Bandar Serai Development Sdn Bhd and Gamuda Land (T12) Sdn Bhd




Gamuda Berhad

  • RM800 mil IMTN Programme (2008/2028)


  • RM800 mil IMTN Programme (2013/2038)
  • RM100 mil ICP Programme (2013/2020)

(with combined limit of RM800 mil)


  • RM5 bil IMTN Programme (2015/2045)
  • RM2 bil ICP Programme (2015/2022)

(with combined limit of RM5 bil)










Bandar Serai Development Sdn Bhd

  • RM1 bil IMTN Programme (2014/2044) 
  • RM500 mil ICP Programme (2014/2021)

(with combined limit of RM1 bil)



Gamuda Land (T12) Sdn Bhd

  • Proposed 30-year IMTN Programme of up to RM2 bil
  • Proposed 7-year ICP Programme of up to RM500 mil

(with combined limit of RM2 bil)



* The ratings reflect irrevocable and unconditional guarantees on the facilities, extended by Gamuda.

The reaffirmation reflects Gamuda’s performance and credit metrics in fiscal 2019, which came within our expectations, underscored by its ability to manage profit compression following the substantial reduction in the contract value of its key project – the Klang Valley Mass Rapid Transit System (KVMRT) Line 2. The Group’s debt burden has also eased after having pared down its borrowings through its enlarged cash pile, following the disposal of its associate stake in Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH) in April 2019.

Gamuda’s pre-tax profit (pre-FRS 11 and excluding unusual items) shrank 13% in fiscal 2019 – the result of profit compression from the drastically reduced contract value of the KVMRT Line 2 project and the disposal of SPLASH, although cushioned to some extent by the strong profit showing of its property segment. Gamuda’s borrowings lightened 8% to RM6.0 bil as at end-July 2019, with its respective gearing and net gearing ratios easing to 0.71 and 0.44 times (end-July 2018: 0.81 and 0.55 times). Nonetheless, the Group’s weaker profitability crimped its funds from operations debt cover (FFODC) from 0.20 to 0.16 times over the same period. 

Looking ahead, Gamuda’s profit performance is expected to moderate in the next couple of years due to smaller contributions from KVMRT Line 2 and the impending disposal of its highway concessions to the Government. This disposal will yield RM2.4 bil of proceeds for Gamuda, but will affect its business diversity. The Group intends to set aside a meaningful amount of  the proceeds to be distributed as special dividends and the remainder will be used to fund its working capital requirements for the Penang Transport Master Plan (PTMP)  and potential construction projects in Australia. While details have not been finalised, Gamuda is prepared to set aside RM1.3 bil to fund the working capital required to bridge the timing gap between reclamation and eventual sale of land. Under this scenario, its gross gearing level is still estimated to stay below 0.7 times while its FFODC will come up to at least 0.15 times.

Meanwhile, the Group’s ratings remain supported by its position as a leading local contractor, with a solid track record in big-scale civil engineering projects. As at end-July 2019, Gamuda’s outstanding order book remained robust at RM9.3 bil – adequate to sustain it through the next couple of years. The Group has a diversified business profile and a strong liquidity position. These factors are, however, moderated by its high level of project-concentration risk; KVMRT Line 2 accounts for over 80% of its outstanding order book. With the completion of KVMRT Line 2 in 2022, it is pertinent that the Group replenishes its order book to provide medium-term earnings visibility. Gamuda’s assumption of the turnkey role in the remaining above-ground works for KVMRT Line 2 (relative to the previous project delivery partner (PDP) model) and its responsibility as the PDP under the PTMP also entail higher risks. Its ratings are further constrained by its expanding property inventory and exposure to the cyclical nature of both the construction and property sectors.


Analytical contact
Karin Koh, CFA
(603) 3385 2508

Media contact
Padthma Subbiah
(603) 3385 2577

Gamuda’s 60%-owned SRS Consortium has been appointed as the project delivery partner (PDP) for the implementation of the PTMP.


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2019 by RAM Rating Services Berhad

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