MARC Ratings has affirmed its rating of A/Stable on Singer (Malaysia) Sdn Bhd’s RM300.0 million Medium-Term Notes (MTN) Programme. The outstanding amount as at end-September 2023 stood at RM101.0 million.
The rating reflects Singer’s long and profitable track record in selling and financing consumer durables and motorcycles, supported by strong operating profit margins. Moderating factors are the high competition particularly in motorcycle financing and its high delinquency rate.
Singer boasts a wide network of 362 outlets and 674 independent merchants nationwide. As of end-1H2023, the company’s total assets stood at RM1 billion. MARC Ratings views that Singer’s high profit rates provide cushion against weaker asset quality. Its three-month gross delinquency rate as at end-1H2023 was high at 34.6% (nine-month basis: 23.8%), reflecting in part its customer profile that is more vulnerable to adverse changes in economic conditions. However, impaired financing on a nine-month basis was 100% provisioned, translating to a net delinquency ratio of zero. Despite the high level of provisioning on impaired financing, Singer continues to show respectable profitability. It posted improved pre-tax profit of RM24.1 million in 1H2023 compared to 1H2022 (RM18.1 million), supported by higher revenue particularly from the motorcycle segment, and high margin, which has averaged around 17% over the past five years. Revenue from the motorcycle segment rose to RM98.5 million in 1H2023 (2022: RM91.7 million).
Singer’s borrowings remained low at RM208.4 million as of end-1H2023, translating to a debt-to-equity (DE) ratio of 0.28x. Following the initial drawdown of RM101.0 million from the MTN programme in September 2023, its DE ratio increased to 0.42x.