The rating of MK Land Holdings Berhad’s (MK Land) tranche 1 and tranche 2 serial bond ratings have been upgraded to A+ which reflects the company’s excellent business position, its strong financial position and the impressive performance of Damansara Damai (DDamai) and Damansara Perdana (DPerdana) projects, of which the sales proceeds have been assigned for the redemption of the bonds. The moderating factor continues to be the vulnerability of the projects to developments in the local property market.

MK Land is one of the leading property developers in Malaysia having developed over the past seven years more than 35,000 units of homes. It has remaining land bank of 5,500 acres with RM16 billion remaining gross development value to sustain its future earnings. MK Land has nine projects located in Selangor, Perak and Kedah, with three key projects in the Klang Valley. The three key projects are DPerdana being developed by Saujana Triangle Sdn Bhd (STSB), DDamai being developed by Medan Prestasi Sdn Bhd (MPSB) and Cyberia Smarthomes being developed by Paramoden Sdn Bhd (PSB).

The good location and accessibility of the DPerdana project aided by the recent spurt of commercial activities in the surrounding areas contributed to the strong take up rate. The overall average take up rates stood at 90.20% as at December 2003. As the land bank of DPerdana is only 15% developed, MK Land expects DPerdana to drive the growth of its future revenue. DDamai, however, has almost been fully developed with only 50 acres of land left for further development.

DDamai and DPerdana sales proceeds have been earmarked for the redemption of the bonds. Total receivables amounting to RM771.04 million as at December 2003, provided a security coverage of 2.57 times which is above the minimum coverage of 1.43 times required under the debt issue structure.

Liquidity risk is mitigated through the requirement for a gradual build up of funds in the SFA and the maintenance of one coupon payment in the Coupon Service Account at all times. As at December 2003, the balance in the SFA stood at RM15.21 million, as scheduled.

MK Land’s financial position continues to be strong with an 18% increase in revenue (from annualized 2002 figures). The higher revenue earned coupled with only marginal increase in cost contributed to a higher profit margin of 31.2% in 2003 compared to 25.4% in FY2002. The increase in revenue was contributed by the better sales and the higher stages of the construction progress, specifically from DPerdana and Cyberia developments.

The group’s debt leverage in FY2003 decreased by half to 0.47 times. Cashflow protection measures remained strong and projections show that the cash flow could withstand delays in collections of progress billings, reduction in take up rates and increase in construction costs.