MARC has affirmed its ratings of AAAID(bg) on Horizon Hills Development Sdn Bhd's (Horizon Hills) Islamic Bank-Guaranteed Medium-Term Notes (IMTN) Programme of up to RM200 million with a stable outlook. The affirmed rating on the IMTN Programme reflects the credit quality of the unconditional and irrevocable guarantee provided by Public Bank Berhad (PBB) on which MARC has a public information rating of AAA/Stable.
Jointly-owned by Gamuda Berhad (50%) and UEM Land Berhad (50%), Horizon Hills is undertaking a freehold mixed-development project on 1,228 acres in Nusajaya, Johor. As at end-September 2014, Horizon Hills has developed 603 acres with a gross development value (GDV) of about RM3.9 billion. Horizon Hills project, which includes an 18-hole golf course has benefitted from close proximity to Singapore and its position as one of the earliest developments in Iskandar Malaysia. For the nine months ended September 2014 (9MFY2014), Horizon Hills launched 617 units of link, cluster, semi-detached houses and bungalows and apartments with a total GDV of RM828.6 million. The sales performance has been comparable with the launches in the preceding year. In FY2013, the company achieved an 80% take-up rate for its launches with a total GDV of RM1,174.8 million. MARC notes that as of end-September 2014, Horizon Hill has total unbilled sales of RM675.5 million that provides medium-term earnings visibility.
Horizon Hills plans to launch 131 residential units and 172 shop offices with a combined estimated GDV of RM500 million by end-2015. However, the sales performance over the medium term could be affected by oversupply concerns due to aggressive development plans in the Iskandar Malaysia region, and tightening regulatory measures both at the federal and state government levels. For FY2013, Horizon Hills' revenue and pre-tax profit registered a significant increase of 63.4% and 75.8% year-on-year to RM691.2 million and RM271.9 million respectively (FY2012: RM423.1 million; RM154.6 million). The company's operating profit margin was higher at 39.3% (FY2012: 36.6%) due to higher margins of its high-end projects.
For 1HFY2014, revenue and pre-tax profit stood at RM391.6 million and RM166.4 million respectively (1HFY2013: RM260.2 million; RM91.3 million), reflecting the continued strong demand for its ongoing projects. As of end-June 2014, Horizon Hills' debt-to-equity (DE) ratio declined to 0.17 times (FY2013: 0.21 times). The company has outstanding RM100.0 million IMTN under the rated programme with the next redemption of RM50.0 million in June 2015. MARC draws comfort from Horizon Hills' unrestricted cash of RM42.9 million and unutilised credit lines of RM102.4 million as of end-August 2014. In addition, the company has the option to roll over/refinance any upcoming redemption under the rated programme, subject to the programme's reduction schedule.
The IMTN noteholders are insulated from downside risks in relation to Horizon Hills' credit profile by virtue of the guarantees provided by PBB.
Contacts:
Jasmine Kua, +603-2082 2280/ jasmine@marc.com.my;
Taufiq Kamal, +603-2082 2251/ taufiq@marc.com.my.
© Press Release 2015
