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16 Jul | Tuesday
RAM Ratings for Eversendai Corporation Berhad - 1Q FY DEC 2013

Performance

Eversendai Corporation Berhad (“Eversendai” or “the Group”) posted a generally weaker y-o-y and q-o-q performance in 1Q FY 2013. Revenue from the structural-steel division, largely derived from the Middle East, fell 19.3% y-o-y as a result of timing differences in its projects and the finalisation of variation orders. Nonetheless, this was largely offset by the better progress of its power-plant and construction projects. The Group’s OPBIT declined 16.7% y-o-y following delays in the finalisation of variation orders on more complex structural-steel works. Q-o-q, Eversendai’s top line sank 11.3% owing to the weaker showing of its structural-steel and construction divisions. Notably, the Group’s OPBIT plummeted 61.4% q-o-q; earnings in 4Q FY 2012 had been boosted by the finalisation of accounts for certain completed projects in the Middle East, aside from the aforementioned reasons for the latest quarter.

Eversendai issued its first RM250 million tranche of Islamic MTN on 11 March 2013. Accordingly, its debt load increased to RM473.5 million at the end of the month, with a corresponding gearing ratio of 0.57 times, i.e. within our expectations. The heftier debt burden had also reduced its funds from operations debt coverage ratio to 0.28 times, albeit still robust, thanks to the Group’s resilient cashflow. At the same time, its operating cashflow debt coverage ratio – although thinner – remained solid.

Outlook

Despite the dip in performance in 1Q FY2013, Eversendai is expected to chart a healthy showing in the coming quarters given that some of its sizeable projects are only in their preliminary stages. Furthermore, the Group’s order book, which currently stands at about RM1.5 billion, is envisaged to provide revenue visibility over the next 2 years. These factors, combined with Eversendai’s stellar project execution and strong cashflow-generating ability, underpin our stable outlook on the long-term rating.

View Quarterly Commentary - EVERSENDAI CORPORATION BERHAD – 1Q FY DEC 2013.
 

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