Friday, Mar 03, 2006
MARC has reaffirmed Glomac Berhad’s (“Glomac”) rating of RM50.0 million Senior Bai’ Bithaman Ajil Islamic Bonds at A+ID; RM60.0 million Junior Bai’ Bithaman Ajil Islamic Bonds (Junior BaIDS) at AID and RM25.0 million Murabahah Notes Issuance Facility/Islamic Medium Term Notes (MUNIF/IMTN) at MARC-2ID/AID. The ratings reflect the company’s established position as a reputable property developer in the Klang Valley and its strong financial performance coupled with an adequate cashflow generating capacity. The moderating factor continues to be the vulnerability of the projects to adverse developments in the property market.
Glomac’s entry into property development began in 1988 and it gained recognition as a commercial developer with landmark buildings in Kelana Jaya namely Glomac Business Centre, Kelana Business Centre and Kelana Centre Point. In line with market demand, Glomac is presently focusing on mixed residential developments, concentrating within the Klang Valley and Johor. As at 31 October 2005, total secured sales from its on-going developments stood at RM1.6 billion with over 80% billed.
In FY2005, Glomac’s revenue earned from its property development division, accounted for 85.0% of total revenue although at moderately reduced levels year-on-year, as its Aman Suria Damansara development is at the tail end of completion while the launch of Suria Stonor, an exclusive high rise condominium development, was deferred. Nonetheless, operating margin improved aided by lower financing costs, higher interest income and the absence of any provisions required for low cost housing. Going forward, revenue will be mainly driven by Glomac Square, a commercial development project which has been fully sold; Suria Stonor, which was launched in July 2005 and which has been well received by the public, with a take-up rate of approximately 60%. In addition, two new developments, The Residence in Cheras and Glomac Boulevard in Kelana Jaya are expected to be launched by early 2006.
Specific phases within the development projects of Aman Suria, Saujana Utama II and Sri Saujana have been earmarked for the redemption of the Senior BaIDS. As at 31 October 2005, the total amount billed from these phases stood at RM389.2 million with the unbilled amount at a mere RM3.4 million. The outstanding balance in the designated account as at 31 December 2005 was approximately RM30.0 million which is more than adequate to meet the Group’s immediate financial obligations.
The Group’s debt leverage level increased marginally in FY2005 due to increased long term borrowings to finance its various land acquisitions. Nevertheless, this was moderated by strong retained earnings and the progressive redemption of the Islamic debt securities. Sensitivity analysis performed on the Group’s projected cashflow revealed a moderate cashflow with minimum and average base case finance service coverage ratios at 1.3 times and 9.9 times respectively.
Glomac’s entry into property development began in 1988 and it gained recognition as a commercial developer with landmark buildings in Kelana Jaya namely Glomac Business Centre, Kelana Business Centre and Kelana Centre Point. In line with market demand, Glomac is presently focusing on mixed residential developments, concentrating within the Klang Valley and Johor. As at 31 October 2005, total secured sales from its on-going developments stood at RM1.6 billion with over 80% billed.
In FY2005, Glomac’s revenue earned from its property development division, accounted for 85.0% of total revenue although at moderately reduced levels year-on-year, as its Aman Suria Damansara development is at the tail end of completion while the launch of Suria Stonor, an exclusive high rise condominium development, was deferred. Nonetheless, operating margin improved aided by lower financing costs, higher interest income and the absence of any provisions required for low cost housing. Going forward, revenue will be mainly driven by Glomac Square, a commercial development project which has been fully sold; Suria Stonor, which was launched in July 2005 and which has been well received by the public, with a take-up rate of approximately 60%. In addition, two new developments, The Residence in Cheras and Glomac Boulevard in Kelana Jaya are expected to be launched by early 2006.
Specific phases within the development projects of Aman Suria, Saujana Utama II and Sri Saujana have been earmarked for the redemption of the Senior BaIDS. As at 31 October 2005, the total amount billed from these phases stood at RM389.2 million with the unbilled amount at a mere RM3.4 million. The outstanding balance in the designated account as at 31 December 2005 was approximately RM30.0 million which is more than adequate to meet the Group’s immediate financial obligations.
The Group’s debt leverage level increased marginally in FY2005 due to increased long term borrowings to finance its various land acquisitions. Nevertheless, this was moderated by strong retained earnings and the progressive redemption of the Islamic debt securities. Sensitivity analysis performed on the Group’s projected cashflow revealed a moderate cashflow with minimum and average base case finance service coverage ratios at 1.3 times and 9.9 times respectively.