Wednesday, Jun 11, 2003
M K Land Holdings Berhad’s (M K Land) tranche 1 and tranche 2 serial bonds ratings have been affirmed at A (single A flat)reflecting the relatively strong financial profile and the strength of the underlying issue structure in which secured sales have been earmarked for the redemption of the bond issues. The take-up rates of Damansara Damai (DDamai) and Damansara Perdana (DPerdana) projects, of which the sales proceeds have been assigned for the redemption of the bonds, have been very impressive resulting in security coverage of 2.30 times. The ratings, however, continue to be moderated by the vulnerability of the projects to developments in the local property market.
The M K Land group is currently engaged in the property development, hotel and resort operations and provision of property maintenance services. In June 2002, the group’s presence in the property development business was further strengthened with the acquisition of four property companies including Saujana Triangle Sdn Bhd (STSB). Following these acquisitions, the group’s total approved land bank increased to 5,261 acres with an expected GDV of RM17 billion over the next 10 years.
Tranche 1 and Tranche 2 bonds of RM150 million each were drawndown in August 2001 and September 2002, respectively. DDamai and DPerdana sales proceeds have been earmarked for the redemption of the bonds. Sales performance to date has been impressive, with average take up rates of 92.8% and 73.5% of total GDV for DDamai and DPerdana projects respectively.
As at 28 March 2003, the total sales of both projects amounted to RM1.93 billion. The total progress billings amounted to RM1.27 billion, out of which 98% or RM1.24 billion has been collected. The total receivables amounting to RM689.87 million provides a security coverage of 2.30 times, above the minimum coverage of 1.43 times required under the structure. This provides adequate security coverage to bondholders, substantially minimizing market risk. In addition, market demand is expected to be sustainable given the strategic locations of the developments and a good mix of property types.
Credit risk is considered minimal, spread over a large number of purchasers. About 95% of the purchasers of DDamai have secured end-financing facilities from financial institutions or the government. For DPerdana properties, about 51% have secured end-financing facilities from financial institutions or the government; 40% of the buyers have pending loans and the balance are cash purchasers. Refinancing risk is mitigated with the requirement for a gradual accumulation of funds in the SFA and the maintenance of one coupon payment in the Coupon Service Account at all times. To date, MK Land has met the first scheduled payment of RM15 million into the SFA in May 2003.
M K Land registered a 184% increase in pre-tax profit to RM265.8 million in FY2002 (2000 : RM93.6 million), increasing its profit margin to 25.4% (2000: 18.2%). This is due to the completion of some of the DDamai packages and the changing of the financial year end, giving a period of 18 months for the current review. Going forward, the acquisitions of STSB, MK Development Sdn Bhd and MKN Properties Sdn Bhd would enhance the group’s performance in the near term.
FY2002 saw the debt-to-equity ratio fall to below one time due to the repayment of term loans and overdraft and increase in shareholders’ funds. The scheduled redemption of the serial bonds would keep the group’s debt leverage within manageable levels.
Cashflow measures remained strong and cash flow projection shows resilience despite assumptions of delays in collections of progress billings and reduction in take up rates.
The M K Land group is currently engaged in the property development, hotel and resort operations and provision of property maintenance services. In June 2002, the group’s presence in the property development business was further strengthened with the acquisition of four property companies including Saujana Triangle Sdn Bhd (STSB). Following these acquisitions, the group’s total approved land bank increased to 5,261 acres with an expected GDV of RM17 billion over the next 10 years.
Tranche 1 and Tranche 2 bonds of RM150 million each were drawndown in August 2001 and September 2002, respectively. DDamai and DPerdana sales proceeds have been earmarked for the redemption of the bonds. Sales performance to date has been impressive, with average take up rates of 92.8% and 73.5% of total GDV for DDamai and DPerdana projects respectively.
As at 28 March 2003, the total sales of both projects amounted to RM1.93 billion. The total progress billings amounted to RM1.27 billion, out of which 98% or RM1.24 billion has been collected. The total receivables amounting to RM689.87 million provides a security coverage of 2.30 times, above the minimum coverage of 1.43 times required under the structure. This provides adequate security coverage to bondholders, substantially minimizing market risk. In addition, market demand is expected to be sustainable given the strategic locations of the developments and a good mix of property types.
Credit risk is considered minimal, spread over a large number of purchasers. About 95% of the purchasers of DDamai have secured end-financing facilities from financial institutions or the government. For DPerdana properties, about 51% have secured end-financing facilities from financial institutions or the government; 40% of the buyers have pending loans and the balance are cash purchasers. Refinancing risk is mitigated with the requirement for a gradual accumulation of funds in the SFA and the maintenance of one coupon payment in the Coupon Service Account at all times. To date, MK Land has met the first scheduled payment of RM15 million into the SFA in May 2003.
M K Land registered a 184% increase in pre-tax profit to RM265.8 million in FY2002 (2000 : RM93.6 million), increasing its profit margin to 25.4% (2000: 18.2%). This is due to the completion of some of the DDamai packages and the changing of the financial year end, giving a period of 18 months for the current review. Going forward, the acquisitions of STSB, MK Development Sdn Bhd and MKN Properties Sdn Bhd would enhance the group’s performance in the near term.
FY2002 saw the debt-to-equity ratio fall to below one time due to the repayment of term loans and overdraft and increase in shareholders’ funds. The scheduled redemption of the serial bonds would keep the group’s debt leverage within manageable levels.
Cashflow measures remained strong and cash flow projection shows resilience despite assumptions of delays in collections of progress billings and reduction in take up rates.