MARC Ratings has affirmed its BBIS rating with a negative outlook on YNH Property Berhad’s (YNH) RM700 million Islamic Medium-Term Notes Programme (Sukuk Wakalah).
The rating takes into account the challenges faced by YNH, as reflected in its credit profile, notwithstanding recent asset monetisation efforts that helped the company meet certain financial obligations. However, YNH is expected to remain reliant on asset disposals due to limited cash flow generation from ongoing projects. The negative outlook reflects limited earnings visibility due to the muted project pipeline over the next 12 months, underscoring the importance of timely asset monetisation to meet near-term obligations and advance deleveraging efforts.
YNH’s business prospects remain limited, with only two ongoing projects generating meaningful cash flow. Nonetheless, its flagship development — Solasta Dutamas in Mont Kiara, with a gross development value (GDV) of RM750 million — has achieved a take-up rate of 65% and surpassed the cash flow breakeven point as of end-July 2025. Another active project, a landed residential development in Manjung, Perak, with a GDV of around RM20.0 million, is currently 67% sold. Total unbilled sales of RM209.9 million offer some earnings visibility and provide adequate liquidity to support construction progress.
Meanwhile, YNH has continued monetising assets to meet debt obligations and reduce leverage. In financial year ended 30 June 2025 (FY2025) to date, the group has completed asset sales totalling RM476 million, including 163 Retail Park in Mont Kiara, Kuala Lumpur (RM215.0 million), and AEON Seri Manjung in Perak (RM138.0 million). The ongoing sale of a 5.1-acre land parcel in Desa Sri Hartamas is expected to be completed by mid-November 2025, pending fulfilment of conditions precedent, including approval to increase the plot ratio from six to seven, which would raise the land value to RM220 million.
YNH maintains a sizeable landbank of approximately 888 acres, providing potential for future project launches. However, limited financial capacity and ongoing deleveraging efforts constrain its ability to fund new developments. With few active projects and constrained cash flow, sustainable earnings and medium- to long-term growth prospects remain limited.
In FY2025, YNH reported higher revenue of RM395.3 million, driven by asset disposals and progress billings from ongoing projects, notably Solasta Dutamas. Despite this, the group posted an operating loss due to initial development costs for core structural works on the Solasta Dutamas project. Loss before tax was RM86.1 million.
Total borrowings declined to RM901.4 million as at end-June 2025, following the RM153.0 million sukuk repayment under the rated programme in February 2025. As of end-July 2025, RM170.0 million remains outstanding under the programme, due on 26 February 2027. YNH targets an improved adjusted debt-to-equity ratio of 0.70x by end-FY2027 (from 1.34x currently). While the lighter balance sheet is positive, MARC Ratings believes the group will need time to strengthen its business profile, given the significant cash flow required to support ongoing operations.
Following the independent audit review conducted in April 2025, YNH has implemented several measures to strengthen its governance structure. These include expanding the board of directors from five to nine members, with the addition of more independent directors to enhance oversight. In addition, the group has established an Investment Committee composed entirely of independent directors, underscoring its commitment to strong governance practices.