RAM Ratings has affirmed the AA1 rating of YTL Corporation Berhad’s RM2 bil Medium-Term Notes (MTN) Programme (2013/2038) as well as the AA1/Stable/P1 ratings of its RM5 bil Commercial Papers Programme and MTN Programme (2019/2044).
The ratings RAM said reflect YTL Corp’s solid business profile, with diversified business lines and operations in multiple continents. Its sturdy track record in concession businesses, superior liquidity position and strong financial flexibility, which provide financial buffers and leverage headroom, complement its strong business profile. The combined operating cash flow (OCF) to net debt coverage of YTL Corp and its utility arm, YTL Power International Berhad (YTLPI), is projected to remain sound at a minimum 0.60 times in the next couple of years, a level which is supportive of an AA1 rating. The combined ratio for FY June 2023 exceeded expectations at 0.41 times (FY June 2022: 0.27 times) RAM added.
Moderating the ratings is the Group’s hefty debt load, about half of which comprises concession- or real estate investment trust-related non-recourse debts. Looking ahead, execution risks stem from expansion into new businesses but the ratings agency said it takes comfort from the Group’s proven investment capabilities and track record. Further, the Group has a track record of monetising assets, as seen in the disposal of YTLPI’s associate stake in ElectraNet Pty Ltd in fiscal 2022 which yielded net proceeds of almost RM2 bil.
Operating profit before depreciation, interest and tax doubled in FY June 2023 while pre-tax profit leapt 76% to an all-time high of RM2.73 bil, boosted by the stellar performance of YTL Corp’s power generation business in Singapore. Stronger cement earnings and a return to profitability of its hotels post pandemic also contributed to the better profit showing. As at end-June 2023, unencumbered cash reserves under YTLPI and YTL Corp company level were substantial at close to RM8 bil and RM561 mil, respectively. YTL Corp’s asset base, as measured by the net realisable asset value (calculated net of liabilities), is also robust.
While YTL Corp remains focused on infrastructure and utilities as core assets, it has expanded further into technology and renewable energy (solar-powered data centre and digital bank segments, among others) adding further diversification to its investment portfolio. To this end, the Group recently announced a collaboration with US-based technology company, Nvidia Corporation, to build artificial intelligence (AI) infrastructure at its data centre park in Johor, utilising Nvidia’s AI chips and software.
