MALAYSIAN RESOURCES CORPORATION BERHAD - 2022 |
||||||||
| Report ID | 6053890046866 | Popularity | 593 views 118 downloads | |||||
| Report Date | Aug 2022 | Product | ||||||
| Company / Issuer | Malaysian Resources Corporation Bhd | Sector | Industrial Products | |||||
| Price (RM) |
|
|||||||
| Rationale |
Rating action MARC Ratings has affirmed its AA-IS rating on Malaysian Resources Corporation Berhad’s (MRCB) Islamic Medium-Term Notes Programme up to RM5.0 billion (Sukuk Murabahah) with a stable outlook. Rationale The rating affirmation reflects MRCB’s longstanding track record as a property developer in transit-oriented developments (TOD). The rating is also supported by the company’s sizeable outstanding construction order book comprising large infrastructure projects. The rating also acknowledges MRCB as an important affiliate of the Employees Provident Fund (EPF). The rating remains moderated by the challenging operating environment for construction players, as well as by the prevailing uncertainty in the domestic property market. As at end-March 2022, MRCB’s outstanding external order book of RM7.6 billion includes key projects in the Klang Valley, namely the Light Rail Transit 3 (LRT3), the Mass Rapid Transit 2 (MRT2), and the Damansara – Shah Alam Elevated Expressway (DASH). The group continues to tender for new infrastructure projects, for which open tenders stood at RM370 million as at end-March 2022. Operating margin for the construction division, however, stood at a low of 4.2% in 1Q2022 and could come under pressure from higher raw material costs. The group’s ongoing property projects have a total gross development value (GDV) of RM2.7 billion as at end-March 2022, with a moderate total take-up rate of 67%. Among these is the Sentral Suites, a TOD project which has attained a strong take-up rate of 84%; unbilled property sales of RM818 million provide earnings visibility over the near term. The group’s inventory level for completed unsold units decreased to RM349.7 million in 1Q2022 (end-2021: RM364.7 million); this amount could decline by about RM189 million following the en-bloc sale of commercial units at 9 Seputeh. For 1Q2022, the group recorded improved y-o-y revenue and operating profit of RM810.7 million and RM52.3 million (1Q2021: RM226.7 million; RM14.9 million). Total borrowings stood at RM2.0 billion as at end-March 2022, of which outstanding under the Sukuk Murabahah accounted for RM1.4 billion or 70%. Profitability will be supported by its sizeable outstanding construction order book, while the resumption of construction works will contribute towards more regular billing collection. Rating outlook The stable outlook reflects our expectation that MRCB will broadly maintain its credit profile within the current levels over the next 12 months. Rating trajectory Upside scenario Any upward movement in the rating and/or outlook is unlikely in the near term. Any upgrade would hinge on strong operating performance of its key businesses and improvement in its leverage position. Downside scenario The rating could come under pressure on weaker business performance and/or if the group undertakes substantial acquisitions that will lead to a sharp increase in debt obligations. Key strengths
Key risks
|
|||||||
| Related | ||||||||
