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Posted Date: September 9, 2021

MARC has maintained its CIS ratings on property developer Talam Transform Berhad's (Talam) outstanding RM40.0 million Settlement Bithaman Ajil Islamic Debt Securities (Settlement BaIDS) as of June 9, 2021. The rating continues to reflect the substantial risk of default on the Settlement BaIDS, notwithstanding the extension of the maturity date of Talam's Settlement BaIDS by 18 months to June 28, 2022, from December 28, 2020.

Talam's business and financial prospects remain challenged by the tough operating environment. It has relied and will continue to rely substantially on proceeds from disposals of land parcels to meet its financial obligations. Timely execution of asset disposals remains a key risk, particularly given the non-prime locations of most of its remaining landbank. Its landbank of 746.0 acres has an estimated unencumbered value of RM317.9 million, according to the company.

Talam recorded revenue of RM36.9 million and pre-tax losses of RM30.1 million in financial year ended March 31, 2021 (FY2021). The losses were mainly due to impairment provisions of RM34.1 million from investment in its subsidiary in China. Cash flow from operations was negative RM51.1 million while cash and bank balances stood at a low RM3.3 million at end-March 2021. The outstanding Settlement BaIDS is partially secured against property units in Taman Puncak Jalil, Bukit Jalil, with an aggregate value of RM9.8 million, providing a low security coverage of 0.25x.

Contacts:

Lim Wooi Loon, +603-2717 2943/ wooiloon@marc.com.my;
Umar Abdul Aziz, +603-2717 2962/ umar@marc.com.my;
Taufiq Kamal, +603-2717 2951/ taufiq@marc.com.my.

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