Wednesday, Jun 28, 2000
Malaysian Rating Corporation Berhad (MARC) has assigned a standalone short-term rating of MARC-2ID to Melombong dan Perumahan Sdn Bhd’s (MDP) RM60 million Murabahah Underwritten Notes Issuance Facility (MUNIF). The rating reflects the strength of the issue structure which captures the sales proceeds of the Ultima I and II condominiums and low cost apartments, that will form the primary source of repayment of the proposed debt issue. In addition, the specific assignments of the Sinking Fund Account (SFA) and Housing Developer’s Accounts (HDA) to the trustee afford further protection to noteholders. The rating is, however, moderated by the uncertainty in MDP’s future development projects after the completion of Bandar Baru Ampang.
MDP is the developer of Bandar Baru Ampang, situated to the south of Old Ampang Town, fronting Jalan Bukit Belacan. Launched in 1991, it is currently at the tail end of development with the construction of the Ultima condominiums and low cost apartments. The sale proceeds from the two developments have been earmarked for the sole purpose of redeeming the debt issue.
The Ultima Condominium Project consists of two 144-unit condominium blocks with total gross development value of RM45.8 million. As at April 2000, about 81% of the condominiums have been sold. Sale of the remaining condominium units appear quite promising; substantially mitigating market risk. The 1,920 low cost apartment units have, to date, achieved 74% sales. And with the receipt of the purchasers name list from the State Government for the remaining 503 units, the apartments can be treated as being fully sold.
Construction risk is viewed as manageable. The Ultima block will be completed and handed over to unit buyers by the end of year 2000. The construction of the low cost apartments, on the other hand, are still at the piling stage and scheduled for completion within 24 months.
Aggregate remaining billings and remaining sales of RM72.2 million and RM30.1 million respectively as at 1 April 2000 are ensured sources of future liquidity. Monies in the sinking fund account will be invested in government treasury bills/securities, fixed income securities with at least a AA rating and fixed deposits with licensed financial institutions.
Profitability measures in the last two fiscal years were a marked improvement over the loss suffered in FY98, with the resumption of construction work at the project site. Despite the continued decline in revenue, MDP’s operating margin trended upwards (FY2000 : 25.6%; FY99 : 24.9%) as the rate of decline in operating cost outpaced that of revenue. Debt leverage had averaged a low 0.24 times in the past five years. The proforma debt equity ratio is projected to increase sharply to 2.4 times, after accounting for the MUNIF.
Investment leverage rose from 133% in FY98 to 146% in FY2000, reflecting the shareholders’ funds growing exposure to the credit risk associated with advances to related companies. The outstanding amounts due from related companies formed 88% of total current assets; exposing the company to liquidity risk as well. Noteholders’ interests are, however, protected under the issue structure, with the repayment of the MUNIF to be met from the sales proceeds of the condominiums and low cost apartments.
MDP is the developer of Bandar Baru Ampang, situated to the south of Old Ampang Town, fronting Jalan Bukit Belacan. Launched in 1991, it is currently at the tail end of development with the construction of the Ultima condominiums and low cost apartments. The sale proceeds from the two developments have been earmarked for the sole purpose of redeeming the debt issue.
The Ultima Condominium Project consists of two 144-unit condominium blocks with total gross development value of RM45.8 million. As at April 2000, about 81% of the condominiums have been sold. Sale of the remaining condominium units appear quite promising; substantially mitigating market risk. The 1,920 low cost apartment units have, to date, achieved 74% sales. And with the receipt of the purchasers name list from the State Government for the remaining 503 units, the apartments can be treated as being fully sold.
Construction risk is viewed as manageable. The Ultima block will be completed and handed over to unit buyers by the end of year 2000. The construction of the low cost apartments, on the other hand, are still at the piling stage and scheduled for completion within 24 months.
Aggregate remaining billings and remaining sales of RM72.2 million and RM30.1 million respectively as at 1 April 2000 are ensured sources of future liquidity. Monies in the sinking fund account will be invested in government treasury bills/securities, fixed income securities with at least a AA rating and fixed deposits with licensed financial institutions.
Profitability measures in the last two fiscal years were a marked improvement over the loss suffered in FY98, with the resumption of construction work at the project site. Despite the continued decline in revenue, MDP’s operating margin trended upwards (FY2000 : 25.6%; FY99 : 24.9%) as the rate of decline in operating cost outpaced that of revenue. Debt leverage had averaged a low 0.24 times in the past five years. The proforma debt equity ratio is projected to increase sharply to 2.4 times, after accounting for the MUNIF.
Investment leverage rose from 133% in FY98 to 146% in FY2000, reflecting the shareholders’ funds growing exposure to the credit risk associated with advances to related companies. The outstanding amounts due from related companies formed 88% of total current assets; exposing the company to liquidity risk as well. Noteholders’ interests are, however, protected under the issue structure, with the repayment of the MUNIF to be met from the sales proceeds of the condominiums and low cost apartments.