Skip to content
  • Group
    • About MARC
    • Leadership
    • Investor Relations
    • Notable Issuances
    • MARC Ratings
    • MARC Solutions
    • MARC Data
    • MARC Learning
    • Careers
  • Services
    • Credit Ratings & Related Assessments
    • Sustainability-Related Assessments
    • Economic & Fixed-Income Analysis
    • Sustainability-Related Advisory
    • Debt Advisory
    • Analytics Consulting Services
    • Subscriptions
    • Data Analytics
    • Credit Reporting
    • Learning Programmes
  • Insights
    • Rating Announcements
    • Research & Analysis
    • Views
    • MARC in the Media
    • Newsfeed
    • Latest@MARC
  • Events & CSR
    • MARCares
    • Events
  • Contact Us
    • Contact Us
    • Service Level Feedback Form
    • Publication Feedback Form
    • Whistleblowing
Menu
  • Group
    • About MARC
    • Leadership
    • Investor Relations
    • Notable Issuances
    • MARC Ratings
    • MARC Solutions
    • MARC Data
    • MARC Learning
    • Careers
  • Services
    • Credit Ratings & Related Assessments
    • Sustainability-Related Assessments
    • Economic & Fixed-Income Analysis
    • Sustainability-Related Advisory
    • Debt Advisory
    • Analytics Consulting Services
    • Subscriptions
    • Data Analytics
    • Credit Reporting
    • Learning Programmes
  • Insights
    • Rating Announcements
    • Research & Analysis
    • Views
    • MARC in the Media
    • Newsfeed
    • Latest@MARC
  • Events & CSR
    • MARCares
    • Events
  • Contact Us
    • Contact Us
    • Service Level Feedback Form
    • Publication Feedback Form
    • Whistleblowing
  • MARC Online
  • Subscribe
  • Group

    Group

    The MARC Group of Companies comprises MARC Ratings, MARC Solutions, MARC Data and MARC Learning.

    • About MARC
    • Leadership
    • Investor Relations
    • Notable Issuances
    • About MARC
    • Leadership
    • Investor Relations
    • Notable Issuances
    • MARC Ratings
    • MARC Solutions
    • MARC Data
    • MARC Learning
    • MARC Ratings
    • MARC Solutions
    • MARC Data
    • MARC Learning

    MARC Ratings

    • Rating Guide
    • Rating Process
    • Rating Symbols & Definitions
    • Rating Methodologies
    • Regulatory
    • Lead Managers

    MARC Solutions

    MARC Data

    MARC Learning

    • Careers
    • Careers
  • Services

    Services

    MARC's subsidiaries each provide distinct product offerings and services.

    • Credit Ratings & Related Assessments
    • Sustainability-Related Assessments
    • Economic & Fixed-Income Analysis
    • Credit Ratings & Related Assessments
    • Sustainability-Related Assessments
    • Economic & Fixed-Income Analysis
    • Sustainability-Related Advisory
    • Debt Advisory
    • Analytics Consulting Services
    • Sustainability-Related Advisory
    • Debt Advisory
    • Analytics Consulting Services
    • Subscriptions
    • Data Analytics
    • Credit Reporting
    • Learning Programmes
    • Subscriptions
    • Data Analytics
    • Credit Reporting
    • Learning Programmes
  • Insights

    Insights

    Find the vital information you need and stay up to date with the latest news from MARC.

    • Rating Announcements
    • Research & Analysis
    • Views
    • Rating Announcements
    • Research & Analysis
    • Views
    • MARC in the Media
    • Latest@MARC
    • MARC in the Media
    • Latest@MARC
  • Events & CSR

    Events & CSR

    MARC organises a diverse range of events throughout the year to engage with all stakeholders.

    • MARCares
    • Events
    • MARCares
    • Events
  • Contact Us

    Contact Us

    Let's get the conversation started - Get in touch with us!

    • Contact Us
    • Service Level Feedback Form
    • Publication Feedback Form
    • Whistleblowing
    • Contact Us
    • Service Level Feedback Form
    • Publication Feedback Form
    • Whistleblowing
MARC Online
Subscribe
Menu
  • Group
  • Services
  • Insights
  • Events & CSR
  • Contact Us
Menu
  • Group
  • Services
  • Insights
  • Events & CSR
  • Contact Us
Credit Ratings & Related Assessments
Economic & Fixed-Income Analysis
Sustainability Related
Debt Advisory
Analytics Consulting Services
Data Analytics
Credit Reporting
Learning Programme

Credit Ratings & Related Assessments

Economic & Fixed-Income Analysis

Sustainability Related

Debt Advisory

Analytics Consulting Services

Data Analytics

Credit Reporting

Learning Programme

  • Insights
  • Rating Announcements
Ratings

MARC Ratings affirms DRB-HICOM’s ratings with stable outlook

9 September 2022

Access the full report here.

View Reports

Contacts

Umar Abdul Aziz
+603-2717 2962/ umar@marc.com.my

Cyndy Goh
+603-2717 2941/ cyndy@marc.com.my

Taufiq Kamal
+603-2717 2951/ taufiq@marc.com.my

MARC Ratings has affirmed its ratings of A+IS and A-IS on DRB-HICOM Berhad’s Sukuk Programme of up to RM3.5 billion and Perpetual Sukuk Musharakah Programme of up to RM2.0 billion. The two-notch rating differential between both issuances reflects the latter’s subordination to the senior sukuk. All ratings carry a stable outlook. The outstanding under the programmes stood at RM2.3 billion and RM350.0 million, respectively, as at September 8, 2022.

DRB-HICOM’s strong market position and track record in the domestic automotive industry as well as healthy liquidity position remain key rating drivers. These strengths are further supported by recurrent income streams from concession assets and contracts. The ratings are mainly moderated by thin margins in the automotive segment and the weak performance of its key subsidiary, Pos Malaysia Berhad, due to the postal company’s cost and revenue structure.

The group’s established strength in assembling and distributing popular models, and the sales tax holiday from June 2020 to June 2022 have supported its performance during the pandemic period. DRB-HICOM’s share of total industry volume has remained above 35% since 2020. For 1H2022, DRB-HICOM sold 116,976 vehicles (2021: 191,745 vehicles; 2020: 187,509 vehicles), with the sales volume improvement largely attributed to its PROTON models. We note that PROTON Holdings Berhad (PROTON) has continued to invest in strengthening the assembly facilities in its Tanjung Malim plant, with the funding for expansion undertaken at its level. This has substantially reduced its reliance on DRB-HICOM for financial assistance as has been in the past.

At end-June 2022, PROTON’s market share stood at 17.3%; given a high backlog of 90,000 units, its sales performance is expected to be sustained over the near term. New models from other marques under the group are expected to support group sales. Notwithstanding these, the industry continued to be affected by supply chain disruptions while rising inflation and interest rates could also lead to softer demand.

Its 53.5%-owned subsidiary Pos Malaysia has continued to drag group performance; the postal subsidiary registered pre-tax loss of RM331.4 million in 2021 due to high operating costs. This has been exacerbated by the growing insourcing of deliveries by major e-commerce companies. Pos Malaysia has embarked on a turnaround plan under a new management since August 2021 that has included rationalising its mail branch network and infrastructure, diversifying its customer base, and implementing a 7-day week for operations. For 1H2022, Pos Malaysia’s pre-tax loss narrowed to RM29.7 million (1H2021: negative RM165.5 million). We expect the management’s continued focus to adhere to prudent cost management will lead to a rebound in Pos Malaysia’s earnings over the near term.

DRB-HICOM’s concession assets, the integrated Immigration, Customs, Quarantine and Security complex in Bukit Kayu Hitam, Kedah, and PUSPAKOM Sdn Bhd provide moderate earnings; the two assets registered combined pre-tax profit of RM23.0 million in 2021. Its wholly-owned subsidiary, Composite Technology Research Malaysia Sdn Bhd, a second-tier component manufacturer for aircraft with outstanding long-term contracts worth RM4.9 billion, registered earnings of RM28.3 million in 2021.

At end-1H2022, group borrowings stood at RM8.9 billion, translating to gross and net debt-to-equity (DE) ratios of 0.97x and 0.62x, higher than as at end-2021 as borrowings at PROTON rose, mainly to fund its capex. We note that the group’s recent issuance of RM350 million perpetual sukuk in August 2022 will not have a material impact on its leverage position given the 50% equity credit accorded to the issuance. DRB-HICOM’s liquidity position remains strong with cash balance of RM3.1 billion against upcoming term obligations of RM1.2 billion. For 1H2022, the group generated adjusted pre-tax profit of RM113.7 million, an improvement from full-year pre-tax loss of RM291.3 million in 2021.

Related Report

Read More

Related Issues

Read More

Related News

Read More

You May Also Like To Read

See All
Ratings

MARC Ratings affirms MARC-1IS/AA-IS ratings on UDA’s ICP/IMTN programmes

8 December 2023

Ratings

MARC Ratings affirms TTM SPV’s AAAIS rating

5 December 2023

Ratings

MARC Ratings affirms Cellco’s MARC-1IS/AAIS ratings

5 December 2023

See All

Let’s get started.

Subscribe to our mailing list today.

Subscribe Now
Group
  • About MARC
  • Leadership
  • Investor Relations
  • Notable Issuances
  • Careers
Regulatory
  • Rating Reviews Summary
  • List of Defaults
  • List of Credit Ratings Published
  • List of Entities on Rating Watch
Services
  • Credit Ratings & Related Assessments
  • Sustainability-Related Assessments
  • Economic & Fixed-Income Analysis
  • Sustainability-Related Advisory
  • Corporate & Debt Restructuring Advisory
  • Subscriptions
  • Analytics Consulting Services
  • Data Analytics
  • Credit Reporting
  • Learning & Customised Programmes
Subsidiaries
  • MARC Ratings
  • MARC Learning
  • MARC Data
  • MARC Solutions
Insights
  • Rating Announcements
  • Research & Analysis
  • Views
  • Latest@MARC
  • MARC in the Media
Events
  • Corporate Events
  • Corporate Social Responsibility (CSR)
  • Advertise with MARC
Contact Us
  • Contact Us
  • Service Level Feedback Form
  • Publication Feedback Form
  • Whistleblowing
  • Group
    • About MARC
    • Leadership
    • Investor Relations
    • Notable Issuances
    • MARC Ratings
    • MARC Solutions
    • MARC Data
    • MARC Learning
    • Careers
  • Services
    • Credit Ratings & Related Assessments
    • Sustainability-Related Assessments
    • Economic & Fixed-Income Analysis
    • Sustainability-Related Advisory
    • Debt Advisory
    • Analytics Consulting Services
    • Subscriptions
    • Data Analytics
    • Credit Reporting
    • Learning Programmes
  • Insights
    • Rating Announcements
    • Research & Analysis
    • Views
    • MARC in the Media
    • Newsfeed
    • Latest@MARC
  • Events & CSR
    • MARCares
    • Events
  • Contact Us
    • Contact Us
    • Service Level Feedback Form
    • Publication Feedback Form
    • Whistleblowing
Terms & Conditions
Privacy Notice
Copyright Notice
Whistleblowing
PDPA Notice
© 2023 Malaysian Rating Corporation Berhad. All rights reserved.
Facebook Twitter Linkedin

Join MARC Mailing List

I would like to subscribe this mailing list. Please tick whichever is applicable

I agree/ do not agree (please tick whichever is applicable) to receive future events, conferences or marketing materials from MARC. *

Privacy Notice *

Declaration *