RAM Ratings reaffirms Road Builder's A1/P1 ratings

Larger Smaller Reset KUALA LUMPUR (Dec 22): RAM Ratings has reaffirmed
the A1/P1 ratings of Road Builder (M) Sdn Bhd's RM400 million Commercial
Papers/Medium-Term Notes Programme (2006/2013) (CP/MTN) with a stable
outlook.

RBM is principally engaged in CONSTRUCTION [] and is wholly owned by IJM CORPORATION BHD [].

In a statement Thursday, RAM Ratings said the ratings of RBM's CP/MTN
reflected the high likelihood of support from its parent, IJM, given the
close connection between the 2 entities.

It said the Company was expected to be able to count on ready support (business and financial) from IJM, if needed.

'The group's strong credit profile is underscored by its diversified
earnings base as well as its established position in the construction
and property sectors, in addition to its healthy financial profile,' it
said.

The rating agency said that on a stand-alone basis, RBM
had established a sound track record in the local construction industry
via its involvement in various civil-engineering and building projects,
including tolled roads, dams, water-treatment plants, airports and
PROPERTIES [].

It said that at present, the company's healthy
RM600 million order book was underpinned by the ongoing apportionment of
construction projects from IJM, given that the former's operations and
human resources had been fully integrated with the IJM Group's
construction division since 2007.

RAM Ratings said as at
end-March 2011, RBM's gearing level and funds from operations debt
coverage ratio stood at a comfortable 0.42 times and 0.24 times,
respectively.

The Company has sufficient liquidity to cover its short-term debt obligations, it said.

Its cash balances of RM115.60 million as at end-September 2011 amply
cover the last principal repayment of RM40 million on its CP/MTN in
March 2012, it said.

On the other hand, RBM is exposed to the
cyclical and competitive construction industry, similar to all
construction companies, it said.

'Nonetheless, we maintain a
positive outlook on the construction sector, underscored by the
implementation of projects under Budget 2012, the 10th Malaysia Plan and
the Economic Transformation Programme.

'This, in addition to
IJM's strong branding and track record, augurs well for the Group (and,
in turn, RBM) in terms of order-book replenishment. We note that the
Group has submitted bids for myriad contracts and had pre-qualified for
various large-scale projects,' it said.