MARC has affirmed its short-term rating of MARC-2IS on Bina Darulaman Berhad’s (BDB) RM100.0 million Islamic Commercial Papers (ICP) Programme with a stable outlook.
The rating incorporates BDB’s competitive strength to be able to undertake public infrastructure and construction contracts in Kedah, its moderate position as a property developer, its moderate leverage position and adequate cash balances. The rating also factors in its status as a Kedah state-owned entity that will support its ability to bid for state contracts.
MARC notes that while the impact from the COVID-19 pandemic has weighed on the group’s business plans and activities during the period, BDB’s focus on optimising cost and unlocking asset value has helped to sustain its performance in 2020. Over the near term, BDB’s focus on the relatively resilient affordable segment of the property market with an ongoing gross development value (GDV) of RM165.7 million is expected to support its property development activities. This notwithstanding, the prospects for the domestic property sector, including in Kedah where the bulk of its projects is concentrated, will be challenging and remain a moderating rating factor.
Its construction division, which had an order book of RM27.4 million at end-2020, is likely to gain from more contracts from the upcoming implementation of water projects in Kedah following an award to upgrade works on a water treatment plant in Pelubang. Other contracts it has received include a RM40.0 million government contract to undertake a non-revenue water project in Perlis. BDB’s recent three-year road maintenance contract valued at RM210.0 million, provides a steady but modest earning stream. It also entered into a joint venture with Menteri Besar Kedah Incorporated to develop the Langkawi Art Box (The LAB, previously known as Langkawi Premium Outlet). Its leisure division, whose performance worsened due to the movement restrictions, remains a drag on profitability.
Group’s debt-to-equity remained low at 0.27x (2019: 0.28x). The refinancing risk, however, is substantially mitigated by its healthy liquidity position with cash and bank balances of RM69.8 million, translating into a cash-debt cover of 56%.
-Ends-
Contacts:
Glenn Wong Liu Yu, +603-2717 2961 / liuyu@marc.com.my
Umar Abdul Aziz, +603-2717 2962 / umar@marc.com.my
Taufiq Kamal, +603-2717 2951 / taufiq@marc.com.my
[This announcement is available on MARC’s corporate website at www.marc.com.my ]
---- DISCLAIMER ----
This communication is provided by Malaysian Rating Corporation Berhad (MARC) based on information believed by MARC to be accurate and reliable as derived from publicly available sources or provided by the rated entity or its agents. MARC, however, has not independently verified such information and makes no representation as to the accuracy or completeness of such information. Any assignment of a credit rating by MARC is solely to be construed as a statement of its opinion and not a statement of fact. A credit rating is not a recommendation to buy, sell, or hold any security.
© 2021 Malaysian Rating Corporation Berhad
© Press Release 2021
Disclaimer: The contents of this press release was provided from an external third party provider. This website is not responsible for, and does not control, such external content. This content is provided on an “as is” and “as available” basis and has not been edited in any way. Neither this website nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this press release.
The press release is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither this website nor our affiliates shall be liable for any errors or inaccuracies in the content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the information within this article is at your sole risk.
To the fullest extent permitted by applicable law, this website, its parent company, its subsidiaries, its affiliates and the respective shareholders, directors, officers, employees, agents, advertisers, content providers and licensors will not be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, including without limitation, lost profits, lost savings and lost revenues, whether in negligence, tort, contract or any other theory of liability, even if the parties have been advised of the possibility or could have foreseen any such damages.
