Friday, May 24, 2002
Malaysian Rating Corporation Berhad (MARC) has assigned a rating of AID (single A flat, Islamic Debt) to Sunrise Berhad’s (Sunrise) RM100.0 million Bai’ Bithaman Ajil Notes Issuance Facility and AID / MARC-2ID ratings to the RM70.0 million Islamic Medium Term Notes and Murabahah Notes Issuance Facility respectively.
The rating reflects the commendable position of Sunrise as a reputable and award-winning property developer, and the company’s historically strong financial profile which was demonstrated by its ability to withstand downturns in the business environment through the 1998/99 economic crisis. The rating also reflects the anticipated strong cash flow generation from the continuous development of its Mont’ Kiara project over the next eight to ten years, which would outweigh the moderate response to its Seremban Forest Heights (SFH) development in the state of Negri Sembilan.
Sunrise has been in the property development business since 1986 and gained its reputation as the leading condominium developer in Malaysia from the development of its Mont’ Kiara development. Property development will continue to be the main revenue contributor to the group while it also derives revenue from facilities and maintenance management, international education and interior design consultancy.
Despite the current demand-supply inequilibrium in the general property sector, Sunrise has managed to secure higher take-up rates than the State average in both its new launches in 2001. The developer commands a strong market position as a result of its competence in site selection, its development expertise and marketing, as well as attractive investor gains on the capital appreciation of its development units. Its current stock of development land at Mont’ Kiara is sufficient to sustain development over the next eight to ten years. While the property outlook in general remains subdued as a result of the inventory overhang, MARC believes that demand for the Mont’ Kiara development will continue to be higher than average due to these positive attributes.
As a property developer, Sunrise is faced with the inherent risks of the industry that flow from cyclicality and competition. However, such risk is mitigated by the company’s focus on the residential sector, where long term demand is comparatively strong, its large inventory of low-cost land which enables it to secure superior margins and its experienced management team. These factors are however offset by the cautious demand for its development stocks at SFH.
Sunrise has sustained a strong balance sheet and adequate cash flow protection measures in the last three years, thanks to its ability to command higher premium for its condominium units and complete projects ahead of schedule. However, longer than expected approvals from the authorities have resulted in the delays of two properties launches, which contributed to the 33% decline in revenue for the FYE June 2001. Its operating margin remained healthy throughout the 1998/99 economic downturn and averaged over 20% in the last five financial years. Its cashflow projections are resilient and can withstand a year’s delay as well as lower take-up in its future projects. The debt servicing capability is expected to remain strong with the cash flow interest coverage and debt service coverage averaging 4.4 and 3.3 times respectively.
The company maintains a moderate gearing policy aided by increases in profit retention. In the absence of new borrowings, the debt/equity ratio is expected to peak at 0.52 times before gradually declining. Sunrise will continue to demonstrate adequate financial flexibility, supported by its listed status, some unencumbered land and undrawn banking facilities.
The rating reflects the commendable position of Sunrise as a reputable and award-winning property developer, and the company’s historically strong financial profile which was demonstrated by its ability to withstand downturns in the business environment through the 1998/99 economic crisis. The rating also reflects the anticipated strong cash flow generation from the continuous development of its Mont’ Kiara project over the next eight to ten years, which would outweigh the moderate response to its Seremban Forest Heights (SFH) development in the state of Negri Sembilan.
Sunrise has been in the property development business since 1986 and gained its reputation as the leading condominium developer in Malaysia from the development of its Mont’ Kiara development. Property development will continue to be the main revenue contributor to the group while it also derives revenue from facilities and maintenance management, international education and interior design consultancy.
Despite the current demand-supply inequilibrium in the general property sector, Sunrise has managed to secure higher take-up rates than the State average in both its new launches in 2001. The developer commands a strong market position as a result of its competence in site selection, its development expertise and marketing, as well as attractive investor gains on the capital appreciation of its development units. Its current stock of development land at Mont’ Kiara is sufficient to sustain development over the next eight to ten years. While the property outlook in general remains subdued as a result of the inventory overhang, MARC believes that demand for the Mont’ Kiara development will continue to be higher than average due to these positive attributes.
As a property developer, Sunrise is faced with the inherent risks of the industry that flow from cyclicality and competition. However, such risk is mitigated by the company’s focus on the residential sector, where long term demand is comparatively strong, its large inventory of low-cost land which enables it to secure superior margins and its experienced management team. These factors are however offset by the cautious demand for its development stocks at SFH.
Sunrise has sustained a strong balance sheet and adequate cash flow protection measures in the last three years, thanks to its ability to command higher premium for its condominium units and complete projects ahead of schedule. However, longer than expected approvals from the authorities have resulted in the delays of two properties launches, which contributed to the 33% decline in revenue for the FYE June 2001. Its operating margin remained healthy throughout the 1998/99 economic downturn and averaged over 20% in the last five financial years. Its cashflow projections are resilient and can withstand a year’s delay as well as lower take-up in its future projects. The debt servicing capability is expected to remain strong with the cash flow interest coverage and debt service coverage averaging 4.4 and 3.3 times respectively.
The company maintains a moderate gearing policy aided by increases in profit retention. In the absence of new borrowings, the debt/equity ratio is expected to peak at 0.52 times before gradually declining. Sunrise will continue to demonstrate adequate financial flexibility, supported by its listed status, some unencumbered land and undrawn banking facilities.