MARC Ratings has affirmed its rating of AIS on HCK Cap Access Berhad’s RM2.0 billion Islamic Medium-Term Notes (IMTN) Programme. HCK Cap Access is a wholly-owned funding vehicle of HCK Capital Group Berhad (HCK). The rating outlook is stable.
HCK’s credit profile is characterised by the group’s track record, property developments catalysed by nearby or integrated education establishments, and its sizeable development pipeline. Counterbalancing these strengths are its modest unbilled sales, project execution and market risks associated with recent and upcoming launches, as well as weak cash flow generation and increasing leverage due to its current development cycle.
The group’s ongoing developments continue to benefit from its niche education-centric development strategy, which integrates educational institutions within its townships. Demand for its residential developments has been supported by accommodation needs among students, families and professionals associated with nearby international schools, colleges and universities. The group’s completed developments have generally demonstrated strong take-up rates, with completed phases of Edusphere, Edusentral and Edumetro recording high take-up rates as at 1H2026. Management highlighted that demand at Edumetro in Subang Jaya remains encouraging, supported by the presence of SEGi College in the vicinity, with accommodation demand continuing to outpace available supply.
As at 1H2026, HCK’s ongoing developments comprised Edusentral, Edumetro, e.Sentral SmartCity and HCK Tower, with a combined launched gross development value (GDV) of RM922 million. While Edusentral’s Harvard high-rise project has achieved a strong take-up rate of 79%, sales at the more recently launched e.Sentral SmartCity near Subang Airport and HCK Tower in Damansara Perdana have remained modest at 55% and 22%, respectively. Nevertheless, management expects sales momentum to improve, supported by the lifestyle-oriented concepts of its newer launches, such as e.Sentral SmartCity and Edusphere Digital, which feature smart homes, pet-friendly facilities, health hubs and nature-inspired environments. The group’s digital marketing initiatives and strategic partnerships with educational institutions and property agents are expected to support sales. The group has a sizeable development pipeline, with planned launches amounting to approximately RM9.0 billion in GDV over 2026–2028. Key future launches include the mixed-use development of Subang Sentral, adjacent to the Edumetro development (GDV: RM2.5 billion), U9 Heights, near Kwasa Damansara (GDV: RM533 million), phases five and six of Edusphere Digital in Cyberjaya (combined GDV: RM819 million), Edura Sentral in Setia Alam (GDV: RM500 million), and Lakeside Cove Residences in Cybervalley (GDV: RM1.6 billion). MARC Ratings views the successful execution and sales performance of these projects as critical to strengthening HCK’s earnings visibility, given its modest unbilled sales of RM149 million as at 1H2026.
The recently launched Edusphere Digital Phase 4 in Cyberjaya, with a GDV of RM391 million, is expected to benefit from continued demand generated by the adjacent University of Cyberjaya and the surrounding educational ecosystem. Meanwhile, management indicated that Hijauan Heights Phase 1 in Semenyih remains on track for launch in 2026. For Subang Sentral, planning refinements and some infrastructure works are ongoing, including the construction of a bridge and an interchange connecting the development to the Shah Alam Expressway (KESAS Highway). While management expects the GDV to remain broadly unchanged at around RM2.5 billion, the sizeable scale of the development introduces execution and funding risks.
Financially, HCK’s earnings profile remains susceptible to development sales progress at its ongoing projects and the timing of property launches. Revenue declined to RM146.4 million in FY2025 from RM493.4 million in FY2024 as most ongoing projects approached completion, while sales for ongoing projects remained slow. Operating profit increased slightly to RM35.6 million from RM32.7 million, largely due to a one-off gain from the partial disposal of a subsidiary. This gain offset inventory write-downs and receivable impairments amounting to RM13.4 million and RM6.3 million, respectively, during the period. Historically, HCK has maintained project-level margins of 15%–20%, supported by efficient project planning and the use of fixed-price construction contracts.
Leverage remained moderate although borrowings increased to fund ongoing projects and initial development costs associated with future launches. Total borrowings rose to RM480.2 million as at 1H2026 from RM417.2 million as at end-2025, translating into debt-to-equity (DE) and net DE ratios of 0.94x and 0.70x, respectively. Cash flow generation remained weak, reflecting slower sales and development expenditure on more recently launched projects. Given the profile of its ongoing developments, the group’s cash flow coverage metrics are expected to be volatile and dependent on the ramp-up in sales from these developments and sales of completed units. Liquidity remained supported by cash balances of RM124.9 million and unutilised banking facilities of approximately RM500 million as at 1H2026. Unsold inventory with a net book value of RM300.2 million as at 1H2026 remained unencumbered.