MARC Assigns Preliminary Rating of AAIS to Fortune Premiere's RM3.0 Billion Sukuk Murabahah; Outlook Stable

Transcription

1. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications MARC​ ​Assigns​ ​Preliminary​ ​Rating​ ​of​ ​AAIS​ ​to Fortune​ ​Premiere's​ ​RM3.0​ ​Billion​ ​Sukuk Murabahah;​ ​Outlook​ ​Stable 17​ ​October​ ​2017 MARC​ ​has​ ​assigned​ ​a​ ​preliminary​ ​rating​ ​of​ ​AAIS​ ​to​ ​Fortune​ ​Premiere​ ​Sdn​ ​Bhd's​ ​(Fortune Premiere)​ ​proposed​ ​RM3.0​ ​billion​ ​Multi-Currency​ ​Islamic​ ​Medium-Term​ ​Notes​ ​Programme (Sukuk​ ​Murabahah).​ ​The​ ​outlook​ ​on​ ​the​ ​rating​ ​is​ ​stable.​ ​The​ ​assigned​ ​rating​ ​applies​ ​only​ ​to ringgit-denominated​ ​notes​ ​issued​ ​under​ ​the​ ​multi-currency​ ​sukuk. Wholly​ ​owned​ ​by​ ​IOI​ ​Properties​ ​Group​ ​Berhad​ ​(IOI​ ​Properties),​ ​Fortune​ ​Premiere​ ​is​ ​a​ ​special funding​ ​vehicle​ ​set-up​ ​to​ ​undertake​ ​the​ ​proposed​ ​sukuk​ ​issuance.​ ​The​ ​assigned​ ​rating​ ​reflects the​ ​credit​ ​strength​ ​of​ ​IOI​ ​Properties​ ​which​ ​will​ ​provide​ ​an​ ​unconditional​ ​and​ ​irrevocable corporate​ ​guarantee​ ​on​ ​the​ ​proposed​ ​sukuk.​ ​The​ ​sukuk​ ​programme​ ​is​ ​established​ ​as​ ​a​ ​funding conduit​ ​for​ ​general​ ​purposes;​ ​the​ ​issuer​ ​may​ ​initially​ ​issue​ ​up​ ​to​ ​RM300​ ​million​ ​under​ ​the programme.​ ​IOI​ ​Properties'​ ​credit​ ​profile​ ​incorporates​ ​its​ ​strong​ ​competitive​ ​position​ ​as​ ​reflected by​ ​its​ ​established​ ​brand​ ​name​ ​and​ ​track​ ​record​ ​of​ ​developing​ ​several​ ​townships​ ​in​ ​the​ ​Klang Valley​ ​and​ ​Johor.​ ​The​ ​group's​ ​strong​ ​balance​ ​sheet,​ ​characterised​ ​by​ ​a​ ​low-to-moderate leverage​ ​position​ ​and​ ​healthy​ ​liquidity​ ​level,​ ​is​ ​a​ ​key​ ​rating​ ​factor. IOI​ ​Properties​ ​has​ ​registered​ ​strong​ ​sales​ ​growth​ ​and​ ​high​ ​profitability​ ​margins​ ​through domestic​ ​property​ ​cycles.​ ​The​ ​group​ ​is​ ​also​ ​exposed​ ​to​ ​Singapore​ ​and​ ​China's​ ​property industry,​ ​but​ ​this​ ​risk​ ​is​ ​largely​ ​mitigated​ ​by​ ​the​ ​group's​ ​limited​ ​number​ ​of​ ​projects​ ​in​ ​both countries.​ ​In​ ​Singapore,​ ​IOI​ ​Properties​ ​has​ ​a​ ​single​ ​ongoing​ ​project,​ ​Trilinq,​ ​which​ ​has​ ​a​ ​GDV​ ​of RM3.1​ ​billion.​ ​The​ ​project​ ​was​ ​completed​ ​in​ ​June​ ​2017​ ​and​ ​has​ ​achieved​ ​sales​ ​of​ ​90%​ ​as​ ​of date.​ ​In​ ​Xiamen,​ ​China,​ ​the​ ​group's​ ​two​ ​residential​ ​developments​ ​IOI​ ​Park​ ​Bay​ ​and​ ​IOI​ ​Palm City​ ​which​ ​have​ ​GDV​ ​of​ ​RM0.9​ ​billion​ ​and​ ​RM1.3​ ​billion​ ​respectively​ ​have​ ​been​ ​fully​ ​sold.​ ​The group​ ​has​ ​planned​ ​for​ ​its​ ​third​ ​project​ ​in​ ​Xiamen​ ​with​ ​the​ ​acquisition​ ​of​ ​a​ ​6.2-acre​ ​land​ ​parcel​ ​in August​ ​2016​ ​for​ ​RM1.4​ ​billion. Domestically,​ ​however,​ ​sales​ ​have​ ​been​ ​lacklustre:​ ​overall​ ​take-up​ ​rates​ ​for​ ​ongoing​ ​domestic projects​ ​was​ ​modest​ ​as​ ​at​ ​end-March​ ​2017.​ ​Nevertheless,​ ​its​ ​low​ ​land​ ​cost​ ​has​ ​meant​ ​that​ ​the group's​ ​projects​ ​generally​ ​have​ ​low​ ​breakeven​ ​levels,​ ​allowing​ ​for​ ​stronger​ ​holding​ ​ability.​ ​There has​ ​been​ ​no​ ​significant​ ​change​ ​in​ ​its​ ​development​ ​approach​ ​domestically;​ ​as​ ​in​ ​the​ ​past,​ ​the group​ ​focuses​ ​on​ ​developing​ ​self-contained​ ​townships,​ ​which​ ​also​ ​allows​ ​for​ ​differentiated offerings​ ​both​ ​in​ ​terms​ ​of​ ​property​ ​type​ ​and​ ​price.​ ​Its​ ​notable​ ​townships​ ​projects​ ​include​ ​16 Sierra,​ ​Bandar​ ​Puchong​ ​Jaya​ ​and​ ​Bandar​ ​Puteri​ ​Puchong​ ​in​ ​Selangor,​ ​and​ ​Bandar​ ​Putra​ ​Kulai
2. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications in​ ​Johor.​ ​As​ ​at​ ​end-March​ ​2017,​ ​total​ ​remaining​ ​GDV​ ​of​ ​ongoing​ ​domestic​ ​projects​ ​stood​ ​at RM4.3​ ​billion,​ ​spread​ ​across​ ​13​ ​townships.​ ​IOI​ ​Properties​ ​has​ ​about​ ​9,800​ ​acres​ ​remaining​ ​land held​ ​for​ ​development,​ ​of​ ​which​ ​about​ ​5,200​ ​acres​ ​are​ ​in​ ​existing​ ​townships. IOI​ ​Properties​ ​has​ ​exhibited​ ​strong​ ​revenue​ ​and​ ​earnings​ ​growth​ ​over​ ​the​ ​last​ ​five​ ​years​ ​from​ ​its three​ ​major​ ​business​ ​segments:​ ​property​ ​development,​ ​property​ ​investment,​ ​and​ ​leisure​ ​& hospitality.​ ​For​ ​financial​ ​year​ ​ended​ ​June​ ​30,​ ​2017​ ​(FY2017),​ ​these​ ​segments​ ​accounted​ ​for 89.3%,​ ​9.5%​ ​and​ ​1.2%​ ​of​ ​operating​ ​profit​ ​respectively.​ ​Operating​ ​profit​ ​margin​ ​remained favourable​ ​at​ ​33.0%​ ​against​ ​industry​ ​average​ ​of​ ​about​ ​16%,​ ​attributable​ ​to​ ​low​ ​land​ ​costs​ ​for domestic​ ​projects,​ ​economies​ ​of​ ​scale​ ​and​ ​improving​ ​contribution​ ​from​ ​its​ ​property​ ​investment segment.​ ​FY2017,​ ​IOI​ ​Properties​ ​incurred​ ​a​ ​one-off​ ​additional​ ​buyer​ ​stamp​ ​duty,​ ​equivalent​ ​to RM163.8​ ​million,​ ​imposed​ ​by​ ​Singapore​ ​for​ ​a​ ​delay​ ​in​ ​the​ ​sales​ ​completion​ ​of​ ​the​ ​Trilinq​ ​project. IOI​ ​Properties​ ​has​ ​a​ ​strong​ ​liquidity​ ​position​ ​with​ ​cash​ ​holdings​ ​of​ ​RM2.4​ ​billion​ ​as​ ​at​ ​end FY2017,​ ​about​ ​RM1.6​ ​billion​ ​net​ ​of​ ​amounts​ ​held​ ​under​ ​housing​ ​development​ ​accounts. MARC​ ​notes​ ​that​ ​the​ ​2.69-acre​ ​Central​ ​Boulevard​ ​land​ ​acquisition​ ​for​ ​SGD2.57​ ​billion​ ​(about RM7.77​ ​billion)​ ​through​ ​wholly-owned​ ​subsidiary​ ​Wealthy​ ​Link​ ​Pte​ ​Ltd.​ ​has​ ​led​ ​to​ ​a​ ​spike​ ​in group​ ​borrowings​ ​to​ ​RM12.5​ ​billion​ ​as​ ​at​ ​end-FY2017.​ ​The​ ​rating​ ​agency​ ​understands​ ​that​ ​an ongoing​ ​plan​ ​to​ ​sell​ ​down​ ​a​ ​33%​ ​stake​ ​in​ ​Wealthy​ ​Link​ ​to​ ​Hong​ ​Kong​ ​Land​ ​Holdings​ ​Limited and​ ​a​ ​subsequent​ ​deconsolidation​ ​exercise​ ​will​ ​result​ ​in​ ​a​ ​pro-forma​ ​debt-to-equity​ ​of​ ​0.31 times.​ ​The​ ​Central​ ​Boulevard​ ​development​ ​will​ ​be​ ​retained​ ​as​ ​investment​ ​property,​ ​and​ ​will​ ​be added​ ​to​ ​the​ ​group's​ ​investment​ ​portfolio​ ​of​ ​nine​ ​office​ ​buildings​ ​and​ ​three​ ​retail​ ​malls​ ​with​ ​a total​ ​net​ ​lettable​ ​area​ ​of​ ​above​ ​5.6​ ​million​ ​sq​ ​ft.​ ​In​ ​FY2017,​ ​the​ ​group's​ ​investment​ ​properties which​ ​were​ ​about​ ​80%​ ​occupied,​ ​contributed​ ​approximately​ ​RM171​ ​million​ ​to​ ​operating​ ​income. The​ ​stable​ ​outlook​ ​reflects​ ​MARC's​ ​expectations​ ​that​ ​IOI​ ​Properties'​ ​credit​ ​metrics​ ​would​ ​remain commensurate​ ​with​ ​its​ ​current​ ​rating​ ​band.​ ​Pressure​ ​on​ ​the​ ​rating​ ​would​ ​emerge​ ​if​ ​take-up​ ​rates for​ ​its​ ​domestic​ ​developments​ ​continue​ ​to​ ​remain​ ​low​ ​and/or​ ​if​ ​borrowings​ ​level​ ​increase​ ​such that​ ​debt​ ​coverage​ ​weakens​ ​sharply​ ​over​ ​the​ ​near​ ​term. Organisation​ ​Name: News​ ​Type: Malaysian​ ​Rating​ ​Corporation​ ​Berhad​ ​(MARC) RATING​ ​ANNOUNCEMENT Source: BNM​ ​Announcements Media​ ​Contact Hari​ ​Vijay,​ ​+603-2717​ ​2937/​ ​harivijay@marc.com.my; Taufiq​ ​Kamal,​ ​+603-2717​ ​2951/​ ​taufiq@marc.com.my
3. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications Disclaimer: This​ ​communication​ ​is​ ​provided​ ​by​ ​Malaysian​ ​Rating​ ​Corporation Berhad​ ​(MARC)​ ​on​ ​the​ ​basis​ ​of​ ​information​ ​believed​ ​by​ ​MARC​ ​to​ ​be accurate​ ​and​ ​reliable​ ​as​ ​derived​ ​from​ ​publicly​ ​available​ ​sources​ ​or provided​ ​by​ ​the​ ​rated​ ​entity​ ​or​ ​its​ ​agents.​ ​MARC,​ ​however,​ ​has​ ​not independently​ ​verified​ ​such​ ​information​ ​and​ ​makes​ ​no​ ​representation as​ ​to​ ​the​ ​accuracy​ ​or​ ​completeness​ ​of​ ​such​ ​information.​ ​Any assignment​ ​of​ ​a​ ​credit​ ​rating​ ​by​ ​MARC​ ​is​ ​solely​ ​to​ ​be​ ​construed​ ​as​ ​a statement​ ​of​ ​its​ ​opinion​ ​and​ ​not​ ​a​ ​statement​ ​of​ ​fact.​ ​A​ ​credit​ ​rating​ ​is not​ ​a​ ​recommendation​ ​to​ ​buy,​ ​sell,​ ​or​ ​hold​ ​any​ ​security.