The affirmation of WCT Land Berhad’s (WCTL) RM132 million Convertible Redeemable Debt Securities (CRDS) rating of A (A flat) reflects the Group’s reputable position as a property developer coupled with its strong financial performance and promising cashflow generating capabilites. The moderating factor continues to be the vulnerability of the projects to the adverse development in the property market.

In December 2004 WCTL was listed on the Second Board of Bursa Malaysia Securities Berhad and is primarily involved in property development activities with ancillary income from its property investment and investment holding activities. The success of its maiden property development, Bandar Bukit Tinggi (BBT) comprising of BBT 1 and 2 is due to its prime location being strategically located at the crossroads of Southern Klang, Selangor; its accessibility by six major highways and the presence of two retail hypermarkets (Tesco and Giant). The encouraging response to WCTL’s newly launched BBT3 which is targeted to medium to high market is a reflection of the favourable demand and strong historical take-up rates for the mixed development and the Group’s timely delivery of quality properties.

BBT 2 and 3 are expected to support WCTL’s revenue base until the year 2009 and 2012
respectively with proceeds peaking in 2006 and 2007 on the back of substantial locked-in sales and the expected positive and sustainable demand for the BBT developments. Consequently, BBT 2 has been identified as the primary source of repayment of the CRDS. MARC expects cash flow protection measures to remain adequate throughout the tenure of the facility. MARC’s sensitivity analysis on WCTL’s projected cash flows reveals a resilient cash flow position under various scenarios of delays in progress billings and lower take up rates.

A further positive rating factor is the provision of a corporate guarantee by WCTL’s parent company WCT Engineering Berhad (WCT) which entails an undertaking by WCT to provide monies to WCTL to redeem the CRDS in the event that WCTL is unable to do so. As redemption is at the option of WCTL, WCT’s potential exposure under such a corporate guarantee will be contingent on the possibility that the CRDS will be fully or partially converted to equity at the maturity of the Facility.

The Group’s profitability continues to record an upward trend on the back of impressive sales from the BBT developments. In tandem, the cashflow protection measures have also been improving. Going forward, BBT2 and 3 are expected to be the main revenue contributor throughout the tenure of the CRDS. The Group’s debt equity level has remained below one time and is well within the CRDS’s financial covenant of 2.5x.