MARC Ratings has affirmed its MARC-1IS/AA-IS ratings on UDA Holdings Berhad’s (UDA) Islamic Commercial Papers/ Islamic Medium-Term Notes (ICP/IMTN) Programmes. The affirmation takes into account the proposed increase in ICP to RM300.0 million from RM100.0 million and in IMTN to RM2.0 billion from RM1.0 billion, resulting in a combined limit of up to RM2.0 billion from RM1.0 billion. The upsizing is intended to provide refinancing headroom for upcoming maturities and to support funding for new project launches. The long-term rating outlook remains stable.
The ratings reflect the high likelihood of government support stemming from the Ministry of Finance’s (MoF) 100% ownership of UDA, with a two-notch uplift from UDA’s standalone profile in line with MARC Ratings’ notching principles for government-related entities.
UDA’s property development activities remain focused on promoting home and business ownership among Bumiputera communities, in line with the government’s socioeconomic objectives. As at end-June 2025, ongoing projects amounted to RM1.4 billion in gross development value (GDV), with upcoming launches located in Kedah and Kuala Lumpur (combined GDV: RM250.0 million). The take-up rate remained modest at 44.5%, while inventory rose to RM338.0 million (1H2024: RM185.6 million), mainly from Residensi 38 Bangsar (RM142.7 million) and unsold office units at Legasi Kampong Bharu (RM158.3 million). Despite the absence of project-level borrowings, high inventory pressured cash flow, prompting enhanced marketing via partnerships with commercial real estate firms.
Occupancy across the group’s investment properties remained stable at 81.1% as at end-June 2025, supported by its office buildings and shopping complexes. Hotel occupancy remained moderate; the group is repositioning its hotels as event venues and targeting tour group packages to enhance yields. The planned refurbishment of Perda City Mall in Penang has been deferred, pending review, while the proposed acquisition of the Bukit Bintang City Centre hotel has been cancelled to preserve balance sheet flexibility. Submissions for the proposed RM1.1 billion mixed-use redevelopment on the 2.9-acre Odeon site in Kuala Lumpur are ongoing, although the project is not expected to be launched in the near term as the group is prioritising existing developments and inventory clearance.
In 1H2025, revenue rose 26.3% y-o-y to RM256.7 million, driven by higher progress billings from ongoing landed residential projects in Johor. Operating cash flow remained negative at RM112.1 million due to construction outflows and working capital needs. Liquidity is supported by RM362.7 million of unrestricted cash (excluding RM73.1 million restricted under the Housing Development Act) and an unencumbered landbank valued at RM3.0 billion. Operating cash flow is expected to remain negative in the near term amid moderate sales and ongoing working capital requirements, with recovery dependent on the clearance of completed inventory.
Borrowings increased to RM1.2 billion as at end-1H2025 (2024: RM1.0 billion) to fund new project launches, lifting the debt-to-equity ratio to 0.39x (2024: 0.35x). UDA is planning an initial RM250 million drawdown under its upsized RM2.0 billion Sukuk Wakalah programme to partially refinance the sukuk maturing in April 2026. Borrowings are expected to remain broadly stable in the near term, with limited working capital drawdowns and no major capex planned.