The ratings of Harum Intisari Sdn Bhd’s (HISB) Al-Murabahah Commercial Papers (MCP) and Medium Term Notes (MMTN) (collectively known as the Programme) of up to a nominal value of RM300.0 million have been affirmed at MARC-1ID (cg)/AA-ID (cg) with stable outlook. The ratings reflect the unconditional and irrevocable corporate guarantee extended by its ultimate holding company, Gamuda Berhad (Gamuda), a leading construction company in Malaysia.

Listed on the Main Board of Bursa Malaysia since 1992, the Gamuda Group’s core businesses include engineering and construction, infrastructure concessions and township development. In FY2005, the Group registered lower revenue and profit before tax (PBT) of RM1.54 billion (FY2004: RM1.72 billion) and RM412.7 million (FY2004: RM434.1 million) respectively, on the back of lower contribution from its property development division. Going forward, the engineering and construction division will continue to be a major revenue and profit contributor to the group with outstanding construction order book of RM4.63 billion as at August 2006. In addition, the infrastructure and water concessions will continue to provide stable support to the Group’s cash flow and profitability.

HISB, a wholly-owned subsidiary of Gamuda, is the developer of Bandar Botanic, an integrated township with mixed developments of semi-detached houses, bungalows, super link homes, double storey terrace homes, apartments and commercial units. Strategically located within Klang, Bandar Botanic is well served by a network of highways such as the Federal Highway, North-Klang Valley Expressway (NKVE), Lebuh Raya Damansara-Puchong (LDP) and KESAS Highway. As at 30 June 2006, a total of 5,591 units of various types of properties have been offered for sale with an estimated Gross Development Value (GDV) of RM1.7 billion. The overall demand for the phases launched over the past four years had been commendable with an average take-up rate of 87%. However, MARC notes that from January 2005 to June 2006, the responses have only been lukewarm evident by the number of units sold vis-à-vis the number of units launched with average take-up rate of 62.2% in which HISB attributed to the weakening consumer sentiments. HISB is currently repositioning itself by reviewing the sales product mix and coming up with innovative development concepts to target niche markets.

The revenue of HISB was predominantly attributable to the development of Bandar Botanic driven by the sales of the commercial units and link-houses in FY2005. For FY2005, HISB’s revenue registered a drop of 50% to RM198 million compared to RM395 million in the previous financial year attributed to the deferred launches, more intense competition, subdued property market and generally weaker consumer sentiments.

HISB’s historical debt levels have been within an acceptable range considering that the debt leverage for property developers in Malaysia ranges between 1.0 to 1.5 times. However, pro-forma debt leverage after taking into account the additional RM300 million debt (based on shareholders’ fund as at FYE2005) stood at 1.29 times, well below the covenanted level of 3.0 times. Shareholders’ funds as at 31 July 2005 amounted to RM231.7 million meeting the requirement of not less than RM150.0 million as stipulated in the issue structure.