Monday, Jul 21, 2008
MARC has revised its outlook on Sunrise Berhad’s (Sunrise) ratings of MARC-1ID /A+ID on RM70.0 million Murabahah Notes Issuance Facility/Islamic Medium Term Notes (MUNIF/IMTN) and A+ID on its RM400.0 million IMTN facility to stable from positive. Concurrently, MARC has affirmed the ratings. The outlook revision to stable reflects expectations of moderation in sales momentum and potential margin pressures arising from the recent fuel hike and rising construction material costs. The affirmed ratings continue to reflect the prime location of its commercial and residential developments at Mont’Kiara, its track record in developing high-end properties, strong operating margins, cash flow generation capacity and financial flexibility, partially offset by its negative free cash flow as a result of its active land bank replenishment.
Sunrise has been able to consistently maintain high take-up rates for its Mont’Kiara projects while eliciting premium pricing for its properties. Its unbilled sales to-date in excess of RM2.0 billion provides reasonable revenue and earnings visibility for the next three years. The Group’s defensible high-end market niche has enabled the Group to sustain consistently high margins while costs are capped by locked in agreements with suppliers.
In FY2007, Sunrise’s revenue increased 55% to RM558.1 million from RM359.2 million in FY2006, while pre-tax profit surged to RM157.4 million from RM41.0 million emanating from high take-up rates of more than 90% at Solaris Mont’Kiara, Solaris Dutamas, Kiara Designer Suites, Banyan, Meridin and 10 Mont’Kiara.
Notwithstanding strong top line and bottom line results, the Group’s cash flow from operations (CFO) decreased to RM7.7 million from RM161.1 million in FY2006, on account of increased working capital requirements for development activity. As a result, the CFO interest coverage and CFO debt coverage declined to 1.67 times and 0.17 times respectively compared to 13.48 times and 3.67 times in FY2006.
For the nine-month period ended 31 March 2008, the Group reported revenue of RM517.7 million and pre-tax profit of RM145.6 million, representing a 34.8% and 37.6% increase in revenue and pre-tax profit respectively compared to the previous year corresponding nine-month period. Apart from favourable on–going commercial and residential developments, the results were boosted by a one-off gain on disposal of Plaza Mont’Kiara amounting to RM46.6 million. Net cash flow from operations however deteriorated to a deficit of RM90.4 million, due to the acquisition of land bank properties locally and abroad. The Group expects to record negative CFO for the financial year ended 30 June 2008. Based on the Group’s unbilled sales as of March 31, 2008, its operating cash flow is expected to turn positive thereafter. The land acquisitions have also caused the Group’s debt-to-equity ratio to rise marginally to 0.43 times from 0.40 times in FY2007, however, gearing continues to remain within the covenanted 1.0 time debt-equity cap. The Group may gear up further to take advantage of opportunities to acquire additional land bank.
On June 18, 2008, Sunrise made a scheduled reduction of RM15.0 million as well as an early redemption of RM15.0 million of its MUNIF/IMTN. Subsequently, on June 19, 2008, Sunrise redeemed and cancelled its final tranche of Bai’ Bithaman Ajil Notes Issuance Facility (BBA) amounting to RM30.0 million. The combined outstanding amount on the rated facilities is RM234.0 million.
Sunrise has been able to consistently maintain high take-up rates for its Mont’Kiara projects while eliciting premium pricing for its properties. Its unbilled sales to-date in excess of RM2.0 billion provides reasonable revenue and earnings visibility for the next three years. The Group’s defensible high-end market niche has enabled the Group to sustain consistently high margins while costs are capped by locked in agreements with suppliers.
In FY2007, Sunrise’s revenue increased 55% to RM558.1 million from RM359.2 million in FY2006, while pre-tax profit surged to RM157.4 million from RM41.0 million emanating from high take-up rates of more than 90% at Solaris Mont’Kiara, Solaris Dutamas, Kiara Designer Suites, Banyan, Meridin and 10 Mont’Kiara.
Notwithstanding strong top line and bottom line results, the Group’s cash flow from operations (CFO) decreased to RM7.7 million from RM161.1 million in FY2006, on account of increased working capital requirements for development activity. As a result, the CFO interest coverage and CFO debt coverage declined to 1.67 times and 0.17 times respectively compared to 13.48 times and 3.67 times in FY2006.
For the nine-month period ended 31 March 2008, the Group reported revenue of RM517.7 million and pre-tax profit of RM145.6 million, representing a 34.8% and 37.6% increase in revenue and pre-tax profit respectively compared to the previous year corresponding nine-month period. Apart from favourable on–going commercial and residential developments, the results were boosted by a one-off gain on disposal of Plaza Mont’Kiara amounting to RM46.6 million. Net cash flow from operations however deteriorated to a deficit of RM90.4 million, due to the acquisition of land bank properties locally and abroad. The Group expects to record negative CFO for the financial year ended 30 June 2008. Based on the Group’s unbilled sales as of March 31, 2008, its operating cash flow is expected to turn positive thereafter. The land acquisitions have also caused the Group’s debt-to-equity ratio to rise marginally to 0.43 times from 0.40 times in FY2007, however, gearing continues to remain within the covenanted 1.0 time debt-equity cap. The Group may gear up further to take advantage of opportunities to acquire additional land bank.
On June 18, 2008, Sunrise made a scheduled reduction of RM15.0 million as well as an early redemption of RM15.0 million of its MUNIF/IMTN. Subsequently, on June 19, 2008, Sunrise redeemed and cancelled its final tranche of Bai’ Bithaman Ajil Notes Issuance Facility (BBA) amounting to RM30.0 million. The combined outstanding amount on the rated facilities is RM234.0 million.