The rating of AA-ID(double A minus, Islamic Debt) assigned to Guthrie Property Development Holding Berhad’s (GPDH) RM750 million Islamic medium term notes programme reflects the strength of GPDH as a leading property developer in the country and its sound financial profile. Other positive rating factors include GPDH’s vast land holding and its commendable reputation and track record of quality and timely completion of developments. Moderating the rating is the inherent cyclicality of the domestic property industry.

GPDH, a subsidiary of Kumpulan Guthrie Berhad (Guthrie), is principally involved in property development activities. Amongst its major on-going developments are Bukit Jelutong, Bukit Subang and Sungai Kapar Indah. GPDH’s success in creating a new lifestyle development concept for all income levels is reflected in the impressive take-up rates in its past launches and has also earned them recognition for their design and quality standards. In the near to medium term GPDH’s development thrust will be focused on the vast tract of plantation land along the Guthrie Corridor Expressway (GCE).

Revenue continued on an upward trend, reaching RM350.2 million at the end of Dec 2002. MARC expects GPDH to register strong revenue growth in its 2003 results, based upon the sustained demand for its developments. Moving forward, GPDH has forecasted strong revenue growth on the back of an estimated total gross development value of RM9.8 billion. Driving the group’s revenue base will be its various developments along the GCE. Operating profit margin has consistently hovered above the industry figure, averaging 19.9 % over the past six-year period.

Under the issue structure, repayment risk is mitigated by a progressive build-up of monies in the Finance Service Reserve Account (FSRA) 24 months before the scheduled principal redemption dates. The maintenance of a pre-funded amount in the FSRA equivalent to one profit payment mitigates liquidity risk.

GPDH has historically maintained a conservative leverage position with its debt-equity ratio currently at 0.1 times. Upon full drawdown of the first two tranches of the Islamic medium term notes programme amounting to RM500 million, the pro-forma debt-equity ratio is expected to be 0.58 times. Debt-equity ratio is capped at 1.1 times under the issue structure.

The group’s cash flow protection measures are strong and have been historically stable, largely aided by its conservative leverage position and strong cash flow generation capacity; a reflection of favourable take-up rates and timely completion of construction works. A minimum finance service coverage ratio of 1.75 times has been set under the issue structure. Financial flexibility is derived from the group’s holding of large tracts of unencumbered land; and its membership of the Guthrie group; one of the leading plantation companies in the country.