MARC Ratings has affirmed its ratings of AIS(cg)/MARC-1IS(cg) on special purpose funding vehicle SkyWorld Capital Berhad’s RM300.0 million Islamic Medium-Term Notes/ Islamic Commercial Papers (IMTN/ICP) Programmes. The rating outlook is stable. The ratings reflect the credit profile of parent SkyWorld Development Berhad (SkyWorld) which has extended an irrevocable and unconditional guarantee on the programmes.
The affirmed ratings are premised on SkyWorld’s well-established track record in developing residential projects in urban areas in the Klang Valley, healthy operating margin, and adequate liquidity position. Moderating the long-term rating are execution risks from business expansions in Penang and Vietnam, as well as pressure from rising input costs, which could weigh on profitability.
As of end-June 2025, SkyWorld has two ongoing projects with a combined gross development value (GDV) of RM1.2 billion. The projects have achieved a combined take-up rate of 73.7% (FY2024: 56.6%). Unbilled sales of RM483.1 million provide near-term earnings visibility. For FY2026, the group intends to launch up to RM2.2 billion worth of projects which will underpin revenue growth in the medium term.
SkyWorld has entered into a joint development agreement with the Penang Development Corporation to build affordable housing in Seberang Jaya and Batu Kawan in Penang with an estimated total GDV of RM13.0 billion over 15 years. To support this project, the group has set up a joint venture with Singapore-based Teambuild Holdings Pte Ltd to establish a prefabricated modular construction plant in Penang. The execution risks associated with the new business venture are mitigated through Teambuild’s extensive experience in prefabricated, pre-finished volumetric construction (PPVC) in its home country Singapore.
For the financial year ended 31 March 2025 (FY2025), SkyWorld registered lower revenue of RM445.5 million from RM688.0 million a year earlier, following the completion of several major projects. Operating margin remained healthy at 22.3%. With only two currently ongoing projects, SkyWorld recorded lower revenue of RM74.6 million in 1QFY2026. As the company plans for new launches and invests in the new PPVC facility that could boost earnings going forward, borrowings are expected to increase to about RM650 million by end-FY2026 from RM496.1 million currently. Gearing could rise, albeit remaining manageable, to about 0.7x. Cash flow from operations are expected to remain negative in the near term as the group incurs initial costs on its new projects. Liquidity remains healthy, supported by unrestricted cash balance of RM364.1 million and available credit lines amounting to RM391.3 million.