MARC Ratings has affirmed its AA-IS rating on Malaysian Resources Corporation Berhad’s (MRCB) Islamic Medium-Term Notes (IMTN) Programme (Sukuk Murabahah) of up to RM5.0 billion, with a stable outlook.
The rating reflects MRCB’s longstanding track record in property and construction — particularly in transit-oriented developments (TOD) — its substantial infrastructure order book, and its status as an important affiliate of the Employees Provident Fund Board (EPF). These strengths are tempered by thin construction margins and the risk of rising leverage resulting from sizeable working capital requirements for upcoming projects.
MRCB is acquiring the remaining 80% stake in Bukit Jalil Sentral Property Sdn Bhd (BJSP) from EPF for RM1.6 billion, giving it full ownership of BJSP’s 76.3-acre landbank. The deal will be fully debt-funded. MRCB plans to dispose of the land and use the proceeds to repay the acquisition borrowings; negotiations are ongoing and targeted for completion by 2H2026. That said, delays in the disposals could pressure the group’s credit profile, as extended holding of debt-funded, non-earning assets would weaken its balance sheet and cash flow.
As at end-September 2025, the unbilled construction order book stood at RM6.0 billion (9M2024: RM4.0 billion). Year-to-date to September 2025, the group secured RM5.5 billion in new projects, including the construction of Kompleks Sukan Shah Alam (KSSA) and its reinstatement as the main contractor of the LRT3 project with a combined value of RM5.3 billion. Construction of KSSA is expected to commence in 1H2026 and be completed in 2Q2029. The project is on deferred payment terms, with Menteri Besar Selangor (Incorporated) (MBI Selangor) to pay RM2.9 billion in cash upon completion in 2029. The group is presently tendering for subcontractors on similar deferred payment terms to ease cash flow strain.
In property development, MRCB has two ongoing domestic projects with a total gross development value (GDV) of RM417 million and a 25% take-up rate as at end-September 2025, with unbilled sales of RM74.7 million. The group remains focused on clearing unsold completed units and does not have any near-term launch plans. As at end-September 2025, unsold completed inventory stood at RM347.5 million (9M2024: RM352.8 million). MRCB’s ongoing foreign projects — MARIS and VISTA, both in Gold Coast, Australia — with a combined GDV of AUD779 million (equivalent to RM2.3 billion), are scheduled for completion in 2028 and 2029. As of end-September 2025, the group recorded sales totalling RM472.0 million for MARIS (76% sold) and RM836.0 million for VISTA (49% sold). From 2028 onwards, property development cash inflows are expected to be driven mainly by these overseas projects.
In 9M2025, revenue declined by 35.2% y-o-y to RM826.0 million, reflecting minimal recognition from new property and construction projects that remain in their early stages of development. Pre-tax profit was correspondingly modest at RM31.7 million. Earnings are expected to improve, backed by an unbilled construction order book of RM6.0 billion. Cash flow from operations (CFO) for MRCB remained volatile, reflecting the inherent cyclicality of the project-based property and construction sector. In 9M2025, CFO was negative at RM238.4 million and is likely to remain negative in 2025 given that key projects are still in their early development phases. However, improvement is expected, supported by the sale of unsold completed units and prospective land, as well as the scheduled completion of MARIS and VISTA in Australia in 2028 and 2029.
As of end-September 2025, total borrowings stood at RM2.3 billion, including RM1.4 billion outstanding under the rated programme. Of this amount, RM200 million will mature in February 2026 and RM200 million in October 2026, with both maturities expected to be rolled over. Borrowings may increase to RM4.0 billion in 2026 to fund the acquisition of BJSP. MRCB intends to repay the acquisition debt using proceeds from land sales currently under negotiation; timely completion of these disposals will therefore be critical to reducing leverage and safeguarding its credit profile. Liquidity remains strong, supported by RM646.2 million in cash and bank balances, while financial flexibility is underpinned by undrawn banking lines (excluding the rated programme) of about RM1.2 billion, unencumbered assets of RM2.9 billion, and the group’s listed status, with additional potential support from key shareholder, EPF.