Thursday, Jan 08, 2004
The reaffirmation of Kenanga Wangsa Sdn Bhd (KWSB)’s corporate debt rating at A-ID (A minus Islamic debt) reflects the strength of the underlying issue structure whereby secured sales from specific property development projects have been assigned for the redemption of the BaIDS issue.
KWSB, a wholly owned subsidiary of Intelbest Sdn Bhd, is principally involved in property development. Two subsidiaries of KWSB, namely Fast Crescent Sdn Bhd (Fast Crescent) and Darar Ehsan Sdn Bhd (Darar Ehsan) are currently involved in a mixed property development at Lestari Perdana, Puchong (the projects).
Secured sales from the property development projects undertaken by Fast Crescent and Darar Ehsan have been identified as the source of repayment of the RM128 million BaIDS facility. To date, sales performance has been impressive with an average take-up rate of 99.1% and 89.4% recorded by Fast Cresent and Darar Ehsan respectively. As at June 2003, total progress billings amounted to RM305.1 million out of secured sales of RM381.0 million, of which RM287.7 million had been collected with remaining receivables of RM93.2 million. The remaining receivables represented a security coverage of 1.57 times over the BAIDS outstanding (net of sinking fund balance), which is above the minimum security requirement under the issue structure.
Credit risk is not concentrated as it is spread over a large number of purchasers, with the majority of them having secured end-financing. Construction and completion risks are considered low given KWSB’s strong connection with the Talam Group, an established property developer; and part control of the project funding by the Security Agent.
Liquidity risk is mitigated through the requirement of gradual accumulation of funds in the Sinking Fund Account (SFA), and the maintenance of one secondary note liquidity buffer in the Finance Service Reserve Account throughout the tenure of the facility.
In tandem with the improved profitability in FY2003, operating cash flow recorded a surplus position after being in deficit for the previous two fiscal years. With the accumulation of funds in the SFA, the effective debt leverage of KWSB decreased to 5.40 times from 11.45 times previously, and will fall further towards the maturity of the BAIDS facility.
KWSB, a wholly owned subsidiary of Intelbest Sdn Bhd, is principally involved in property development. Two subsidiaries of KWSB, namely Fast Crescent Sdn Bhd (Fast Crescent) and Darar Ehsan Sdn Bhd (Darar Ehsan) are currently involved in a mixed property development at Lestari Perdana, Puchong (the projects).
Secured sales from the property development projects undertaken by Fast Crescent and Darar Ehsan have been identified as the source of repayment of the RM128 million BaIDS facility. To date, sales performance has been impressive with an average take-up rate of 99.1% and 89.4% recorded by Fast Cresent and Darar Ehsan respectively. As at June 2003, total progress billings amounted to RM305.1 million out of secured sales of RM381.0 million, of which RM287.7 million had been collected with remaining receivables of RM93.2 million. The remaining receivables represented a security coverage of 1.57 times over the BAIDS outstanding (net of sinking fund balance), which is above the minimum security requirement under the issue structure.
Credit risk is not concentrated as it is spread over a large number of purchasers, with the majority of them having secured end-financing. Construction and completion risks are considered low given KWSB’s strong connection with the Talam Group, an established property developer; and part control of the project funding by the Security Agent.
Liquidity risk is mitigated through the requirement of gradual accumulation of funds in the Sinking Fund Account (SFA), and the maintenance of one secondary note liquidity buffer in the Finance Service Reserve Account throughout the tenure of the facility.
In tandem with the improved profitability in FY2003, operating cash flow recorded a surplus position after being in deficit for the previous two fiscal years. With the accumulation of funds in the SFA, the effective debt leverage of KWSB decreased to 5.40 times from 11.45 times previously, and will fall further towards the maturity of the BAIDS facility.