Thursday, Jul 08, 2004
The reaffirmation of Talam Corporation Berhad’s (Talam) rating at A reflects its strong underlying issue structure, in which assignment of sale proceeds from the Saujana Puchong development project forms the source of repayment of the bond issue; the group’s strengthened capital structure; the improving financial profile of the group and its competitive position as one of the largest developers in the country. The rating, however, is moderated by the historically high debt leverage position.
A sum equivalent to 20% of the selling price of each unit developed under Talam’s Saujana Puchong development is set aside towards the serial redemption of the bonds, thus mitigating liquidity risk. As at 29 February 2004, funds in the redemption account amounted to RM29.2 million, which is more than sufficient to meet the redemption of the second series of the bonds of RM15 million due in November 2004. Bond coupon payments meanwhile are primarily met from the net rental proceeds from Talam’s Maxisegar and Pandan Kapital buildings which continue to record high occupancy rates.
Under the RM1.074 billion Saujana Puchong development, sales as at 29 February 2004 amounted to RM794.2 million against total GDV launched of RM796.3 million.
Following the restructuring exercise which led to the consolidation of the property division of Europlus Berhad into the Talam group in November 2003, Talam’s revenue grew by 1.7% to RM912.0 million, contributing to a higher pre-tax profit of RM71.1 million compared to FY2003. Correspondingly, operating margin rose from 6.3% to 8.5% in FY2004.
Debt leverage position returned to pre-2002 levels of less than 1.0x, supported by the enlarged capital base subsequent to the group’s restructuring exercise. Assuming no further borrowings, the gradual redemption of the bonds is expected to correspondingly reduce the group’s leverage position moving forward.
A sum equivalent to 20% of the selling price of each unit developed under Talam’s Saujana Puchong development is set aside towards the serial redemption of the bonds, thus mitigating liquidity risk. As at 29 February 2004, funds in the redemption account amounted to RM29.2 million, which is more than sufficient to meet the redemption of the second series of the bonds of RM15 million due in November 2004. Bond coupon payments meanwhile are primarily met from the net rental proceeds from Talam’s Maxisegar and Pandan Kapital buildings which continue to record high occupancy rates.
Under the RM1.074 billion Saujana Puchong development, sales as at 29 February 2004 amounted to RM794.2 million against total GDV launched of RM796.3 million.
Following the restructuring exercise which led to the consolidation of the property division of Europlus Berhad into the Talam group in November 2003, Talam’s revenue grew by 1.7% to RM912.0 million, contributing to a higher pre-tax profit of RM71.1 million compared to FY2003. Correspondingly, operating margin rose from 6.3% to 8.5% in FY2004.
Debt leverage position returned to pre-2002 levels of less than 1.0x, supported by the enlarged capital base subsequent to the group’s restructuring exercise. Assuming no further borrowings, the gradual redemption of the bonds is expected to correspondingly reduce the group’s leverage position moving forward.