Share
KUALA LUMPUR (Dec 17): Malaysian Rating Corporation Bhd (MARC) has revised its rating outlook for Fortune Premiere Sdn Bhd's RM3 billion multi-currency sukuk programme to negative from positive while affirming its AA-IS rating.
Fortune Premier is the funding vehicle of its parent company, IOI Properties Group Bhd, which had extended an unconditional and irrevocable guarantee of the Islamic medium-term notes issuance.
The revised outlook is based on the weakening in IOI Properties’ debt metrics due to the swell in borrowings to an expected RM157.7 billion from RM11 billion as at end-June 2021 (FY21), said MARC analysts Lim Wooi Loon, Umar Abdul Aziz and Taufiq Kamal in a statement.
They said the new borrowings will fund the acquisition of a 0.78-hectare land parcel in Marina View, Singapore costing S$1.5 billion (RM4.68 billion), resulting in the group debt-to-equity (DE) ratio rising to 0.8 times from 0.56 times while increasing the inventory level to RM2.4 billion in FY21 from RM2.2 billion in FY20.
MARC said the AA-IS rating was affirmed as it reflects IOI Properties’ market position and track record in the domestic property development which provides the group with healthy operating profit and margin, adding that the property developer has an unbilled sales of about RM800 million which provides near-term earning visibility.
However, the rating is moderated by IOI Properties’ exposure to market risk for its projects as it had launched 10 domestic projects in FY21 which are mainly located within its existing townships, and has a combined gross development value (GDV) of about RM1.2 billion.
The group’s ongoing projects, meanwhile, carry a GDV of RM2.6 billion, with projects in Malaysia accounting for 74% of the GDV with an average take-up rate of 48% while projects in China make up the remaining 26% with an average take-up rate of 60%.
“Over the medium term, the success of its key investment property project, IOI Central Boulevard Towers (GDV: S$3.7 billion or RM11.4 billion) in Singapore would provide a major boost to its rental revenue stream. This project is expected to be completed by the second half of 2023.
“The recently acquired Marina View land parcel is expected to be converted into a residential development to complement the nearby IOI Central Boulevard Towers project,” said MARC.
The rating agency wrote that IOI Properties’ overall revenue grew by 17.6% year-on-year (y-o-y) to RM2.5 billion in FY21, driven by its domestic property development segment which offsets the lower contribution from pandemic-affected property investment, and hospitality and leisure segments.
“For the property investment segment, rental rebates have been given to tenants, while the hospitality and leisure segment was considerably impacted by travel restrictions. As a result, operating profit was lower by 6.7% y-o-y to RM714.2 million. The group has a sizeable cash balance of RM1.8 billion as at end-FY21,” added MARC.
Shares of IOI Properties were unchanged at RM1.02, giving the property developer a market capitalisation of RM5.62 billion.
Get the latest news @ www.EdgeProp.my
Subscribe to our Telegram channel for the latest stories and updates
TOP PICKS BY EDGEPROP
Estuari Gardens @ Puteri Harbour
Iskandar Puteri (Nusajaya), Johor
