MARC Ratings has affirmed the ratings of Tropicana Corporation Berhad’s (Tropicana) RM1.5 billion Islamic Medium-Term Notes (IMTN) (Sukuk Wakalah-2020), RM1.5 billion IMTN (Sukuk Wakalah-2024), and RM2.0 billion Perpetual Sukuk Programmes at AIS, AIS and A-IS, respectively. The ratings outlook on all three programmes has been maintained at positive.
The positive outlook reflects the group’s continued efforts to balance deleveraging with the expansion of its property development activities through the acquisition of new development sites. While MARC Ratings acknowledges the significant progress made in the group’s deleveraging efforts, recent debt-funded acquisitions of development land have slowed down the deleveraging progress. Proceeds from ongoing asset monetisation efforts, that are expected to be channelled towards paring down borrowings, would bring the group back on track towards its deleveraging target of a debt-to-equity (DE) ratio of below 0.60x.
Tropicana had previously demonstrated progress in reducing borrowings and enhancing its liquidity position through the monetisation of investment properties and land parcels. Leverage improved slightly as at end-June 2026, with gross DE declining to 0.66x (2025: 0.70x), primarily driven by the repayment of borrowings following the completion of land sales. In addition, the group plans to finalise another land sale in Johor for RM489 million this year. These initiatives are viewed positively as they support the group’s deleveraging efforts while providing funding flexibility to meet its working capital requirements.
The group’s adequate liquidity position, comprising cash balances of RM735.1 million as at end-June 2026 and available banking facilities of RM621.2 million as at end-December 2025, provides additional comfort in meeting its operational and financial commitments. Notwithstanding the prevailing liquidity position, Tropicana plans to upsize its Sukuk Wakalah-2024 Programme limit to RM3.0 billion from the current RM1.5 billion, with proceeds from issuances under the enlarged programme going towards redeeming maturing notes under its Sukuk Wakalah-2020 and Perpetual Sukuk Programmes. The group plans to terminate the RM1.5 billion Sukuk Wakalah-2020 and RM2.0 billion Perpetual Sukuk Programmes upon the full redemption of their outstanding amounts.
Tropicana’s track record in property development and improved earnings visibility remain key considerations for the rating affirmation. The group’s unbilled sales, across its ongoing development projects with a gross development value of RM8.2 billion, stood at RM1.4 billion as at end-June 2026. The modest overall take-up rate of 53% can be partially attributed to the sizeable projects launched more recently in 2H2025. While the bulk of the ongoing developments have reached breakeven sales, take-up for later launches comprising leisure and high-end, high-rise properties in Genting Highlands, Pahang, and Johor Bahru, Johor, have been relatively weaker. Measures to accelerate sales through product repricing and more aggressive marketing could promote higher take-up rates over the development period. Nevertheless, the slow take-up rates could increase the group’s working capital requirements, potentially negating its ongoing deleveraging efforts and reversing the trend of declining completed inventory. The level of completed inventory moderated at end-2025, standing at RM253 million (2024: RM324 million).
The group generated revenue of RM1.16 billion in 1H2026 (1H2025: RM590.5 million), with land sales accounting for 44% of total revenue. Revenue from property development and property management accounted for about RM1.1 billion, or 96% of total revenue. Operating profit margins, however, remained modest, partly due to high land cost accruals on ongoing developments. Profitability in 2026 is expected to be boosted by gains from land sales during the year.