ASEAN corporates resilient despite recession

Published on 04 Mar 2021.

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Large corporates in Malaysia and ASEAN have generally been able to weather the financial strain arising from the repercussions of the COVID-19 pandemic. Their survival amid this unprecedented crisis is underscored by sturdy balance sheets as well as the Government’s swift and sizeable stimulus packages.    

In RAM Ratings’ recently published 2020 Corporate Default and Rating Transition Study, we tracked the performance and credit health of nearly 740 non-financial firms listed on Bursa Malaysia, along with almost 2,000 companies in ASEAN-6 (ASEAN-5 + Vietnam). Despite weaker earnings and underutilised capacity, the overall data suggest that large corporates’ debt protection metrics have remained intact during the pandemic. Notably, Malaysian corporates have fared better than their ASEAN peers.

While regional corporate earnings nose-dived in 2Q 2020 at the height of strict lockdowns, results rebounded in the following two quarters. In Malaysia, firms’ leverage and debt servicing capacity – as indicated by their median pre-tax earnings-to-debt ratio – remained favourable at 0.34 times (ASEAN-6: 0.23 times) as at end-3Q 2020. This is because their leverage – as indicated by the debt-to-equity ratio – was not excessive (3Q 2020: Malaysia 0.22 times; ASEAN-6 0.38 times). Their liquidity almost stayed adequate, with the median Malaysian company having sufficient cash to sustain up to 3.5 months’ operations (ASEAN-6: two months).

Companies usually prioritise cash conservation amid crises, although this may be at the expense of employment and/or capacity utilisation. The available data on 4Q 2020 company results indicate further improvement in debt metrics for this region, despite some transient setbacks from second or third waves coronavirus infection (refer to Figure1).

Figure1: Credit metrics of large ASEAN corporates

Sources: Refinitiv Eikon and RAM calculations
The ratios for 4Q 2020 are computed based on 1,048 corporates (Indonesia:14; Malaysia:118; Philippines:7; Singapore:36;
Thailand:131; Vietnam:742), for which such data is available.

Closer scrutiny of the sectoral breakdown of Malaysian corporates reveal that the transportation, property and construction industries have been the hardest hit by the pandemic. These sectors have been directly affected by the slew of lockdowns in the past year. On the other hand, the technology, healthcare and telecommunication sectors are the star performers, similar to everywhere else as life adjusts to the new normal (refer to Figure2).

Figure2: Sectoral performance of listed corporates in Malaysia, 3Q 2020

Sources: Refinitiv Eikon and RAM calculations
Sectoral performance is compared using the medians for four aspects: EBITDA, Debt/Equity ratio, EBITDA/Debt ratio and liquidity.
The eleven sectors are ranked for each indicator (1 to 11). A composite rank is then obtained based on the average rank for all indicators.

As global interest rates languish at record lows and economies begin reopening amid vaccine roll-outs, we anticipate corporate debt metrics in ASEAN-6 to gain further traction this year. For further details, this article may be downloaded here.


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Established in 1990, RAM Ratings is a leading credit rating agency registered under the Securities Commission’s Guidelines on Registration of Credit Rating Agencies, 2011. In addition to the provision of credit ratings for corporate bonds and sukuk and their issuers, RAM Ratings also provides research and publications on Islamic finance, fixed income and macro-economic and industry analysis as well as data analytics relating to credit risk, counterparty assessments and other related domains. 


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Publication Date Published Category
Commentary - Corporate Asean in Lockdown 04-Mar-2021 Default Study View PDF