MARC has affirmed its AA+IS rating with a stable outlook on Sime Darby Property Berhad’s (SD Property) Islamic Medium-Term Notes Programme of RM4.5 billion under the Shariah principle of Musharakah.
SD Property’s well-established position as a township developer and its strong sales track record in domestic property development remain key rating drivers. Its sizeable landbank of 15,199 acres in key population growth areas in the Klang Valley that offers prospects for development, and its low leverage position underpin the group’s credit profile. The rating incorporates a one-notch uplift for implicit support from parent Permodalan Nasional Berhad.
In 1H2021, SD Property launched 20 domestic projects with a combined gross development value (GDV) of about RM1.6 billion, bringing the total GDV of ongoing projects to RM7.5 billion. Of this, the Klang Valley accounted for a sizeable 86%, underscoring the strong average take-up rate of 88%. In addition to location, the good response is due to its property mix with a focus on landed residential units priced in the mid-market segment with strong highway connectivity. Unbilled sales of RM1.8 billion as at end-June 2021, provides healthy earnings visibility. In terms of inventory level, this was lower at RM554.1 million (1H2020: RM871.7 million).
For 1H2021, SD Property recorded y-o-y improvement in revenue and operating profit to RM1.1 billion and RM159.5 million. Its borrowings increased slightly to RM3.4 billion as at end-June 2021, with a low gross and net debt-to-equity ratios of 0.37x and 0.29x. This includes the outstanding sukuk of RM800 million. Moving forward, its major commitments comprise funding requirements for industrial and logistics developments and a capital call of about RM663.2 million as at end-June 2021 for its Battersea Power Station project. SD Property has retained strong financial flexibility stemming from significant unutilised financing facilities and sizeable unencumbered landbank.
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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