RAM Ratings affirms APM’s sukuk ratings

Published on 21 Nov 2023.

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RAM Ratings has affirmed the AA2/Stable rating of APM Automotive Holdings Berhad’s (APM or the Group) RM1.5 bil Islamic Medium-Term Notes (IMTN) Programme (2016/2036) and the P1 rating of its RM1.5 bil Islamic Commercial Papers Programme (2016/2023). The two programmes are subject to a combined limit of RM1.5 bil.

The affirmation of APM’s ratings is premised on the expectation that the Group will be able to maintain its conservative financial profile and strong market position within the local automotive parts sector. The Group’s strong operating and financial performance in FY Dec 2022 and in 1H FY Dec 2023, are in line with the robust automotive sector performance. However, the upcoming year is expected to become more challenging for the automotive sector as consumer demand is affected by mounting economic hurdles, escalating costs of living, and increased car ownership costs. APM’s solid balance sheet accords it significant financial flexibility and a buffer to tide over industry downturns.

In FY Dec 2022, APM’s revenue jumped 42.1% to RM1.74 bil, supported by a record-breaking year in terms of domestic automotive sales (FY Dec 2021: RM1.22 bil). The domestic automotive sector’s total industry volume (TIV) soared 41.6% to 720,658 units, supported by the extension of the sales tax exemption for passenger cars delivered until March 2023, as well as a slew of new popular model launches. Concurrently, APM enjoyed better demand from the local replacement market, exports and its Indonesian operations. Buoyed by the strong top line performance, the Group’s pre-tax profit surged more than threefold to RM54.1 mil (FY Dec 2021: RM17.1 mil). Nevertheless, APM’s margin for operating profit before depreciation, interest and tax slid to 4.77% due to higher raw material, logistics and manpower costs (FY Dec 2021: 5.07%).

The Group’s strong performance continued into 1H FY Dec 2023. APM’s turnover increased 16.8% y-o-y to RM 937.5 mil, as domestic original equipment manufacturer (OEM) customers rushed to fulfill bookings made during the sales tax exemption period and to ramp up production for new model launches. The Group’s pre-tax profit improved 39.7% to RM31.3 mil, aided by higher contributions from its joint ventures (JVs) in Indonesia as well as gains from the sale of moulds and tooling (1H FY Dec 2022: RM22.4 mil). Despite the end of the sales tax exemption, TIV for 2023 is expected to surpass 700,000 units again due to strong demand for new car models. Up to 9M 2023, TIV stood at 571,767 units, 11.1% higher y-o-y (9M 2022: 514,449). As such, we expect APM to record another strong performance in FY Dec 2023.

APM remains in net cash position as at end-December 2022 and end-June 2023. Supported by the Group’s strong performance and minimal borrowings, APM’s funds from operations (FFO) debt cover improved to a respective 0.72 times and 0.77 times in fiscal 2022 and 1H FY Dec 2023 (fiscal 2021: 0.65 times). Barring any significant merger and acquisition (M&A) activity, we expect APM’s operating cashflows to easily meet its modest annual capital expenditure requirements. Therefore, we expect the Group to maintain its net cash position and robust debt-servicing ability.

The ratings are moderated by various factors, including APM’s susceptibility to changes in input prices and foreign exchange rates, especially when the costs of raw materials and logistics experience significant escalation and when the ringgit depreciates sharply. Additionally, APM faces concentration risk as sales to Perusahaan Otomobil Kedua Sdn Bhd (Perodua) typically account for 30%-40% of its top line. The Group is exposed to economic cycles, as the demand for automotive parts is closely tied to the overall performance of the local automotive industry, which in turn closely reflects the health of the domestic economy.


Analytical contact
Thong Mun Wai
(603) 3385 2522

Media contact
Sakinah Arifin
(603) 3385 2500


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
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