Skip to content
  • Group
    • About MARC
    • Leadership
    • Investor Relations
    • Notable Issuances
    • MARC Ratings
    • MARC Solutions
    • MARC Data
    • MARC Learning
    • Careers
  • Services
    • Credit Ratings & Related Assessments
    • Sustainability-Related Assessments
    • Economic & Fixed-Income Analysis
    • Sustainability-Related Advisory
    • Debt Advisory
    • Analytics Consulting Services
    • Subscriptions
    • Data Analytics
    • Credit Reporting
    • Learning Programmes
  • Insights
    • Rating Announcements
    • Research & Analysis
    • Views
    • MARC in the Media
    • Newsfeed
    • Latest@MARC
  • Events & CSR
  • Contact Us
    • Contact Us
    • Service Level Feedback Form
    • Publication Feedback Form
    • Whistleblowing
Menu
  • Group
    • About MARC
    • Leadership
    • Investor Relations
    • Notable Issuances
    • MARC Ratings
    • MARC Solutions
    • MARC Data
    • MARC Learning
    • Careers
  • Services
    • Credit Ratings & Related Assessments
    • Sustainability-Related Assessments
    • Economic & Fixed-Income Analysis
    • Sustainability-Related Advisory
    • Debt Advisory
    • Analytics Consulting Services
    • Subscriptions
    • Data Analytics
    • Credit Reporting
    • Learning Programmes
  • Insights
    • Rating Announcements
    • Research & Analysis
    • Views
    • MARC in the Media
    • Newsfeed
    • Latest@MARC
  • Events & CSR
  • Contact Us
    • Contact Us
    • Service Level Feedback Form
    • Publication Feedback Form
    • Whistleblowing
  • Sign In
  • Subscribe
  • Group

    Group

    The MARC Group of Companies comprises MARC Ratings, MARC Solutions, MARC Data and MARC Learning.

    • About MARC
    • Leadership
    • Investor Relations
    • Notable Issuances
    • About MARC
    • Leadership
    • Investor Relations
    • Notable Issuances
    • MARC Ratings
    • MARC Solutions
    • MARC Data
    • MARC Learning
    • MARC Ratings
    • MARC Solutions
    • MARC Data
    • MARC Learning

    MARC Ratings

    • Rating Guide
    • Rating Process
    • Rating Symbols & Definitions
    • Rating Methodologies
    • Regulatory
    • Lead Managers

    MARC Solutions

    MARC Data

    MARC Learning

    • Careers
    • Careers
  • Services

    Services

    MARC's subsidiaries each provide distinct product offerings and services.

    • Credit Ratings & Related Assessments
    • Sustainability-Related Assessments
    • Economic & Fixed-Income Analysis
    • Credit Ratings & Related Assessments
    • Sustainability-Related Assessments
    • Economic & Fixed-Income Analysis
    • Sustainability-Related Advisory
    • Debt Advisory
    • Analytics Consulting Services
    • Sustainability-Related Advisory
    • Debt Advisory
    • Analytics Consulting Services
    • Subscriptions
    • Data Analytics
    • Credit Reporting
    • Learning Programmes
    • Subscriptions
    • Data Analytics
    • Credit Reporting
    • Learning Programmes
  • Insights

    Insights

    Find the vital information you need and stay up to date with the latest news from MARC.

    • Rating Announcements
    • Research & Analysis
    • Views
    • Rating Announcements
    • Research & Analysis
    • Views
    • MARC in the Media
    • Latest@MARC
    • MARC in the Media
    • Latest@MARC
  • Events & CSR

    Events & CSR

    MARC organises a diverse range of events throughout the year to engage with all stakeholders.

    • MARCares
    • Events
    • MARCares
    • Events
  • Contact Us

    Contact Us

    Let's get the conversation started - Get in touch with us!

    • Contact Us
    • Service Level Feedback Form
    • Publication Feedback Form
    • Whistleblowing
    • Contact Us
    • Service Level Feedback Form
    • Publication Feedback Form
    • Whistleblowing
MARC Online
Subscribe
Menu
  • Group
  • Services
  • Insights
  • Events & CSR
  • Contact Us
Menu
  • Group
  • Services
  • Insights
  • Events & CSR
  • Contact Us
Credit Ratings & Related Assessments
Sustainability- Related Assessments
Economic & Fixed-Income Analysis
Subscriptions
Sustainability- Related Advisory
Debt Advisory
Analytics Consulting Services
Data Analytics
Credit Reporting
Learning Programme

Credit Ratings & Related Assessments

Sustainability- Related Assessments

Economic & Fixed-Income Analysis

Subscriptions

Sustainability- Related Advisory

Corporate & Debt Restructuring Advisory

Analytics Consulting Services

Data Analytics

Credit Reporting

Learning & Customised Programme

  • Insights
  • Rating Announcements
Rating

MARC assigns AAIS/AA ratings to OSK Unit’s proposed Sukuk/MCMTN

29 September 2020

View Reports

Contacts

Lim Wooi Loon, +603-2717 2943/ wooiloon@marc.com.my
Taufiq Kamal, +603-2717 2951/ taufiq@marc.com.my

Posted Date: September 29, 2020

MARC has assigned preliminary ratings of AAIS/AA to special purpose vehicle OSK Rated Bond Sdn Bhd’s (OSKRB) proposed Sukuk Murabahah/Multi-Currency Medium-Term Notes Programme (Sukuk/MCMTN) with a combined limit of up to RM2.0 billion. The ratings outlook is stable. The assigned ratings apply to ringgit-denominated sukuk/notes issued under the programme.

Wholly owned by OSK Holdings Berhad (OSK), OSKRB was set up to undertake the Sukuk/MCMTN programme, proceeds of which will be on-lent to the group. MARC has equalised the ratings of the issuance under the programme to OSK’s corporate credit rating based on the unconditional and irrevocable guarantee extended by the parent to the programme. OSK is a non-operating investment holding company with key subsidiaries involved in property development and capital financing, and has a substantial stake in RHB Bank Berhad, a major domestic bank in the country.

OSK’s AA corporate credit rating is driven by a well-established operational track record in its key businesses, a low leverage position and strong financial flexibility that partly stems from its 10.13% stake in RHB Bank. This stake, which has provided a substantial dividend income stream to the group in recent years and remains a strong source of liquidity, is a rating consideration.

OSK’s property development is characterised by few and staggered launches, risk sharing through joint-venture arrangements, large unbilled sales of RM1.3 billion, and low property inventory of RM16.0 million as at end-June 2020. It has an ongoing gross development value (GDV) of RM3.3 billion. This includes township developments Bandar Puteri Jaya in Sungai Petani and Iringan Bayu in Seremban, as well as joint developments Agile Mont Kiara in KL and the Melbourne Square (MSQ) in Melbourne, Australia, its first and only foreign property project. The domestic projects have achieved an overall take-up rate of 78% while MSQ has a take-up rate of 77%. The healthy response could be attributed to the group’s property strategy of avoiding extensive launches, particularly in the current weak environment.

OSK’s other key business is capital financing, through which it has built a loan portfolio of RM864.3 million by end-June 2020 (end-2018: RM566.0 million). Lending is on a relatively short-term basis (tenure ranges from 2 to 48 months) and is well collateralised. Non-performing loans have remained low, standing at 1.7% as at end-2019. MARC expects both property development and capital financing to remain the mainstay of the group’s financial performance over the medium term, supported by a modest income stream from property investments, and moderate but steady earnings, circa between RM26 million and RM33 million p.a., from the manufacture and sale of power cables and industrialised building system.

At the group level, revenue hovered around RM1.2 billion p.a between 2017 and 2019 but adjusted profit before tax (on excluding gain on disposal) grew sharply from RM254.3 million to RM470.5 million over the same period on the back of higher-margin properties sold and lower finance costs. For 1H2020, however, it recorded lower y-o-y revenue of RM430.3 million and adjusted pre-tax profit of RM151.7 million (1H2019: RM600.3 million; RM200.5 million) which was due to fewer property launches and the impact from the COVID-19 pandemic during the period. Group borrowings have remained relatively flat at about RM2.4 billion with a gross debt-to-equity (DE) ratio of 0.46x at end-June 2020. About 34% of the group’s borrowings reside in its property operations with the bulk of the remainder in capital financing and investment holding. Excluding capital financing, the group’s borrowings would stand at RM1.7 billion, translating to low adjusted gross and net DE ratios of 0.32x and 0.20x. In the medium term, the group’s DE ratio is projected to range between 0.48x and 0.55x, including the expected initial issuance of about RM500 million under the rated programme which will be mainly used to refinance OSK’s existing unrated MTN/Sukuk and to part fund its working capital requirement.

At the holding company level, OSK derived dividend income of RM278.3 million in 2019 (2018: RM174.3 million) of which RHB Bank contributed RM103.6 million or 37.2% (2018: RM71.1 million or 40.8%). OSK’s equity stake in RHB Bank is valued at about RM3.1 billion at end-2019, or 37.4% of the group’s total assets. At the holding company level, borrowings have been low at around RM305.3 million.

The stable outlook assumes OSK will maintain its credit metrics through a continued cautious stance in property development by maintaining low inventory levels, and a conservative approach to capital financing activities such that NPLs are below 2.0%. MARC also expects OSK to continue to maintain a disciplined approach to its borrowing levels such that net gearing is not more than 0.5x.

Contacts:

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

List related news | List related issues | List related reports


Related Report

Read More

Related Issues

Read More

Related News

Read More

You May Also Like To Read

See All
Ratings

MARC Ratings withdraws ratings on Danajamin

17 March 2023

Ratings

MARC Ratings affirms AAIS rating on BEWG’s RM400.0 million Sukuk Wakalah

17 March 2023

Ratings

MARC Ratings upgrades PTP’s Sukuk Murabahah rating to AAIS

14 March 2023

See All

Let’s get started.

Subscribe to our mailing list today

Subscribe Now
Group
  • About MARC
  • Leadership
  • Investor Relations
  • Notable Issuances
  • Careers
Regulatory
  • Rating Reviews Summary
  • List of Defaults
  • List of Credit Ratings Published
  • List of Entities on Rating Watch
Services
  • Credit Ratings & Related Assessments
  • Sustainability-Related Assessments
  • Economic & Fixed-Income Analysis
  • Sustainability-Related Advisory
  • Corporate & Debt Restructuring Advisory
  • Subscriptions
  • Analytics Consulting Services
  • Data Analytics
  • Credit Reporting
  • Learning & Customised Programmes
Subsidaries
  • MARC Ratings
  • MARC Learning
  • MARC Data
  • MARC Solutions
Insights
  • Rating Announcements
  • Research & Analysis
  • Views
  • Latest@MARC
  • MARC in the Media
Events
  • Corporate Events
  • Corporate Social Responsibility (CSR)
  • Advertise with MARC
Contact Us
  • Contact Us
  • Service Level Feedback Form
  • Publication Feedback Form
  • Whistleblowing
  • Group
    • About MARC
    • Leadership
    • Investor Relations
    • Notable Issuances
    • MARC Ratings
    • MARC Solutions
    • MARC Data
    • MARC Learning
    • Careers
  • Services
    • Credit Ratings & Related Assessments
    • Sustainability-Related Assessments
    • Economic & Fixed-Income Analysis
    • Sustainability-Related Advisory
    • Debt Advisory
    • Analytics Consulting Services
    • Subscriptions
    • Data Analytics
    • Credit Reporting
    • Learning Programmes
  • Insights
    • Rating Announcements
    • Research & Analysis
    • Views
    • MARC in the Media
    • Newsfeed
    • Latest@MARC
  • Events & CSR
  • Contact Us
    • Contact Us
    • Service Level Feedback Form
    • Publication Feedback Form
    • Whistleblowing
Terms & Conditions
Privacy Notice
Copyright Notice
Whistleblowing
PDPA Notice
© 2023 Malaysian Rating Corporation Berhad. All rights reserved.
Facebook Twitter Linkedin

Join MARC Mailing List

I would like to subscribe this mailing list. Please tick whichever is applicable

I agree/ do not agree (please tick whichever is applicable) to receive future events, conferences or marketing materials from MARC. *

Privacy Notice *

Declaration *