MARC Ratings has affirmed its rating of A+IS on YNH Property Berhad’s (YNH) Islamic Medium-Term Notes (IMTN) Programme of up to RM700 million (Sukuk Wakalah) with a stable outlook.
YNH’s established track record in the domestic property industry and low land cost that provides for healthy profitability margins remain key rating drivers. The high market value of its land parcels in Kuala Lumpur that have strong prospects for development is also a rating consideration. Moderating the rating are the group’s modest unbilled sales and high leverage position.
MARC Ratings notes that YNH is undertaking an asset-backed securitisation exercise involving 163 Retail Park and AEON Seri Manjung that is expected to generate RM422.5 million in cash proceeds by end-1H2023. The proceeds will be largely utilised to pare down borrowings that will lower the debt-to-equity ratio to 1.05x from 1.47x as at end-June 2022.
YNH’s ongoing property development projects have a combined gross development value (GDV) of RM810 million as at end-August 2022. Of these, Solasta Dutamas, a high-rise residential project in the Mont Kiara area, accounted for 95.4% of GDV. Recently launched, this project recorded 60% bookings. The remaining GDV is from the ongoing phases within the group’s township development in Manjung, Perak. The township covers 1,200 acres to date and generates revenue of about RM60 million to RM70 million p.a. Inventory level was low at about RM135 million as at end-June 2022, largely due to the group’s approach in pacing its project launches. Total unbilled sales stood at RM128.4 million.
For 1H2022, revenue increased by 7.8% y-o-y to RM106.3 million, mainly from higher progress billings on the completion of the Kiara 163 project. Operating profit was lower y-o-y at RM23.0 million due to a one-off expenditure. Operating profit margin remained strong at about 22%. YNH has cash balance of RM51 million as at end-June 2022, against short-term maturing loans of RM40 million.