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KUCHING, Aug 28: Malaysian national oil company Petroliam Nasional Berhad (Petronas) is among the region’s top 10 cash holders, which collectively held US$532 billion (US$1-RM4.54) or 40 per cent of the total Asian cash balance at end-2022.
According to a report by Bernama dated Aug 2, international credit rating company Moody’s Investors Service has affirmed Petronas with an A2 rating and a stable outlook.
This is based on Moody’s examination of cash holdings of 214 non-financial companies in Asia (excluding Japan) as of June 30, 2023.
Besides Petronas, the other nine companies comprised seven from China and one each from South Korea and Taiwan.
There are also three other oil and gas (O&G)-based companies in the top 10 list, namely China Petrochemical Corporation (Sinopec Group, A1 stable); China National Petroleum Corporation (CNPC, A1 stable); and China National Offshore Oil Corporation (CNOOC, A1 stable).
“Together, they held 86 per cent of the O&G sector’s cash balance at the end of 2022. These companies maintain high cash balances through the O&G price cycle, which reflects their strong liquidity and prudent financial policies,” Moody’s reportedly said in a statement.
Moody’s also reported technology, media, and telecommunications (TMT) companies hold a quarter of the region’s cash pile, helped by strong cash flow generation.
Meanwhile, O&G companies ranked second in cash holdings, supported by elevated energy prices. The property sector ranked third despite a contraction in cash holdings in 2022.
Overall, Moody’s projected that the cash holdings of rated non-financial companies in Asia (excluding Japan) will hold steady at around US$1.3 trillion in the next 12 to 18 months as investment-grade companies, which account for most of the cash holdings, maintain their significant cash positions.
It said cash continues to play an important role in supporting a company’s liquidity and is vital for operational needs, corporate solvency and the ability to pay off short-term liabilities as they come due.
Furthermore, ample cash allows a company to seize investment opportunities as they arise and acts as a buffer against unexpected expenses or downturns in a business. — DayakDaily
