MARC Ratings has maintained its ratings of AAIS/AA on funding vehicle OSK Rated Bond Sdn Bhd’s Sukuk Murabahah/ Multi-Currency Medium-Term Notes (Sukuk/MCMTN) Programmes which will be upsized to RM3.5 billion from RM2.0 billion. The ratings outlook is stable. The programmes carry an unconditional and irrevocable guarantee from OSK Holdings Berhad (OSK).
The ratings continue to reflect OSK’s strong operational and financial performance across key operating segments, namely property, capital financing and banking (through a 10.3% associate stake in RHB Bank Berhad). The strong balance sheet structure that is characterised by a low leverage position is a rating consideration.
As at 1H2024, ongoing domestic property projects — including Iringan Bayu, Seremban, and Bandar Puteri Jaya, Sungai Petani — had unbilled sales of RM761 million, with an overall take-up rate of about 62%. Domestic completed inventory remained low at about RM6.3 million. The ongoing Phase 2 of its joint-venture Melbourne Square project in Australia achieved a take-up rate of 54% as at end-June 2024.
The group has a total of RM1.8 billion under its capital financing portfolio, of which 28.6% or RM524.8 million is accounted for by credit lending in Australia, with a focus on the commercial real estate segment. MARC Ratings understands that proceeds from further issuances under the enlarged programme would be utilised to fund expansion of the group’s capital financing business. The rating agency does not expect OSK’s leverage position to weaken considering the group’s strong profitability track record and moderate dividend payout of about 28% over the past five years.
Overall group performance remained in line with that of the previous year’s corresponding period; revenue and pre-tax profit registered at RM1.2 billion and RM439.1 million as at end-September 2024. Operating profit margin remained healthy at 18.9%. Consolidated borrowings remained unchanged at RM3.3 billion, translating into a gross debt-to-equity ratio of 0.51x, and 0.31x on excluding funding for capital financing. Total outstanding under the rated programmes stood at RM1.46 billion as of end-September 2024.
This announcement should be read in conjunction with the credit analysis report published on October 16, 2024.