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Lafarge Malaysia Bhd unit's proposed Sukuk Wakalah programme of up to RM500mil

The program to be issued by Lafarge Cement Sdn Bhd (LCSB) comprises of the Islamic medium term notes (IMTN) and commercial papers (2017/2024).

RAM Ratings said concurrently, the AA2/Stable/P1 ratings of Lafarge Malaysia Bhd’s RM350mil Islamic securities programme (2010/2017) have been reaffirmed.

“The credit profile of LCSB reflects its importance as the main operating entity of Lafarge Malaysia, having contributed over 70% of the group’s revenue and operating profit before depreciation, interest and tax (OPBDIT) over the past few years.

“Lafarge Malaysia sells its cement entirely through LCSB. Therefore, the ratings of LCSB’s proposed sukuk are equated to those of Lafarge Malaysia.

“LCSB is financially strong on its own and has no external borrowings at present. Even after the issuance of the proposed sukuk, its net gearing ratio is anticipated to remain strong at 0.3 times,” it said in a statement.

RAM Ratings said the reaffirmation of Lafarge Malaysia’s ratings reflected its expectations the group will overcome near-term industry challenges given its established market position within the local cement sector, its highly integrated operations and operational support from the global network of its parent, LafargeHolcim Ltd.

LafargeHolcim is the world’s largest producer of building materials.

However, the group’s financial performance has been affected by the increasingly competitive operating environment.

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