Monday, Aug 20, 2001
Malaysian Rating Corporation Berhad (MARC) has affirmed Melombong dan Perumahan Sdn Bhd’s (MDP) RM60 million Murabahah Underwritten Notes Issuance Facility (MUNIF) rating at MARC-2ID.
The rating affirmation reflects the strength of the issue structure which captures the sales proceeds of the Ultima I and II condominiums and low cost apartments to form the primary source of repayment of the debt issue. In addition, the specific assignments of the Sinking Fund Account (SFA), Housing Developer’s Accounts (HDA) and non-HDA Account to the Trustee afford further protection to Noteholders. The rating is further strengthened by the recent completion of the Ultima condominiums and the reduction in Facility limit to RM42 million vis-à-vis the remaining billings of RM62.6 million; providing a security cover of 1.5x as at end-April 2001.
MDP is the developer of Bandar Baru Ampang, situated to the south of Old Ampang Town, fronting Jalan Bukit Belacan. Launched in 1991, the development is already at the tail end with the development of low cost apartments, which are currently at various stages of construction. Together with the recently completed Ultima condominiums, the remaining progress billings from these two developments will form the primary source of repayment for the outstanding MUNIF.
The Ultima condominium development consists of two 144-unit condominium blocks with total gross development value (GDV) of RM45.8 million. As at end-April 2001, about 99% of the condominiums have been sold. The 1,920 units of low cost apartments on the other hand have achieved 94% sales; hence mitigating substantially the market risk. MDP is confident of selling the remaining 6% when it receives the qualified purchasers name list from the State Government.
With the recent completion of the Ultima condominiums, construction risk is viewed as manageable. The completed condominium units are currently in the process of handing over to unit owners. Construction of the low cost apartments, on the other hand, is at various stages of construction and scheduled for completion by July 2002, well within the MUNIF period.
Aggregate remaining billings and sales of RM62.6 million and RM5.3 million respectively as at 30 April 2001 are assured sources of future liquidity for its Facility limit of RM42 million. The Facility limit was further reduced to RM35 million as at 10 July 2001 following the redemption and cancellation of another RM7 million between the two dates. Investment risk is minimal, as funds in the SFA are only invested in government treasury bills/securities, fixed deposits with licensed financial institutions and fixed income securities with at least AA- (double A minus) rating or its equivalent.
MDP did not perform well financially during the year given the ongoing construction work for the development of both properties and the lower profit margin from its low cost apartments. Nevertheless, FY2002 should see an improvement, as MDP would be able to reap better profits following the completion of the Ultima condominiums. Debt leverage is still within a manageable level of 0.64x as at 10 July 2001.
Investment leverage (i.e advances to related companies over shareholders’ funds) rose further to 167% from 146% in FY2000; reflecting the shareholders’ funds growing exposure to credit risk associated with advances to related companies. Liquidity risk remains significant with advances to the other companies within the Talam group forming 70% of total current assets. Noteholders’ interests are, however, protected under the issue structure, with the repayment of the MUNIF to be met specifically from the sales proceeds of the Ultima condominiums and low cost apartments.
The rating affirmation reflects the strength of the issue structure which captures the sales proceeds of the Ultima I and II condominiums and low cost apartments to form the primary source of repayment of the debt issue. In addition, the specific assignments of the Sinking Fund Account (SFA), Housing Developer’s Accounts (HDA) and non-HDA Account to the Trustee afford further protection to Noteholders. The rating is further strengthened by the recent completion of the Ultima condominiums and the reduction in Facility limit to RM42 million vis-à-vis the remaining billings of RM62.6 million; providing a security cover of 1.5x as at end-April 2001.
MDP is the developer of Bandar Baru Ampang, situated to the south of Old Ampang Town, fronting Jalan Bukit Belacan. Launched in 1991, the development is already at the tail end with the development of low cost apartments, which are currently at various stages of construction. Together with the recently completed Ultima condominiums, the remaining progress billings from these two developments will form the primary source of repayment for the outstanding MUNIF.
The Ultima condominium development consists of two 144-unit condominium blocks with total gross development value (GDV) of RM45.8 million. As at end-April 2001, about 99% of the condominiums have been sold. The 1,920 units of low cost apartments on the other hand have achieved 94% sales; hence mitigating substantially the market risk. MDP is confident of selling the remaining 6% when it receives the qualified purchasers name list from the State Government.
With the recent completion of the Ultima condominiums, construction risk is viewed as manageable. The completed condominium units are currently in the process of handing over to unit owners. Construction of the low cost apartments, on the other hand, is at various stages of construction and scheduled for completion by July 2002, well within the MUNIF period.
Aggregate remaining billings and sales of RM62.6 million and RM5.3 million respectively as at 30 April 2001 are assured sources of future liquidity for its Facility limit of RM42 million. The Facility limit was further reduced to RM35 million as at 10 July 2001 following the redemption and cancellation of another RM7 million between the two dates. Investment risk is minimal, as funds in the SFA are only invested in government treasury bills/securities, fixed deposits with licensed financial institutions and fixed income securities with at least AA- (double A minus) rating or its equivalent.
MDP did not perform well financially during the year given the ongoing construction work for the development of both properties and the lower profit margin from its low cost apartments. Nevertheless, FY2002 should see an improvement, as MDP would be able to reap better profits following the completion of the Ultima condominiums. Debt leverage is still within a manageable level of 0.64x as at 10 July 2001.
Investment leverage (i.e advances to related companies over shareholders’ funds) rose further to 167% from 146% in FY2000; reflecting the shareholders’ funds growing exposure to credit risk associated with advances to related companies. Liquidity risk remains significant with advances to the other companies within the Talam group forming 70% of total current assets. Noteholders’ interests are, however, protected under the issue structure, with the repayment of the MUNIF to be met specifically from the sales proceeds of the Ultima condominiums and low cost apartments.