Boustead Properties is a 52%-owned subsidiary of Boustead Holdings Bhd (Boustead).
RAM said that the Group’s Mutiara Damansara project in Selangor continued to garner active buying interest last year, with most of its launches fully sold within 9 months.
Riding on its prime location, competitive pricing and Boustead Properties’ established reputation as a developer, Mutiara Damansara is expected to continue to drive the group’s earnings in the next five to six years.
The rating agency said that the group was in the midst of completing the development of its retail hub known as The Curve in Mutiara Damansara, which commenced construction in the second half of 2003 and is targeted to be opened towards end-2004.
The Group is expected to spend some RM250mil for this development.
This will be mainly funded by its proposed capital-raising exercise comprising a rights issue of 48.17 million shares, which is expected to raise some RM220mil.
On the other hand, Boustead Properties’ Mutiara Rini project in Johor Baru has been encountering keen competition from other townships in the vicinity. This had caused most of the planned launches for 2003 and first half of 2004 to be deferred, RAM added.
Although the group has the ability to delay its launches by virtue of its low holding cost, continued postponement would eventually impinge on its cashflow generation. – Bernama
RAM said although the group’s Malaysian operation had not staged a remarkable performance in 2003, they nonetheless rebounded during the first half of this year following a more stable container haulage sector and the rationalisation of its clientele to focus on higher-yielding customers.
This is anticipated to form the basis for further improvement in ILB’s operating efficiency and profitability in the future.
RAM said the rating was also premised on the group’s China operations, which have expanded at a robust pace in the past two years and which were expected to chart continued growth with better returns.
RAM said by establishing its presence in China, the group had been able to capitalise on the rapid growth of the country’s logistics outsourcing market.
Given this, ILB’s operations in China are envisaged as its main growth driver for the future, it added.
However, ILB’s performance may also be subject to the volatility of economic cycles given its dependence on domestic and global trading activities, RAM said.
It said the group’s China operations were exposed to high customer concentration risk given its reliance on MNCs such as IBM and IKEA as its major warehousing tenants.
“While we acknowledge that this may be unavoidable due to the nature of its supply-chain management models, ILB’s reliance on any single customer remains a risk.'' – Bernama
In a statement, RAM said the rating reflected Genting’s strong business and financial profiles, underscored by its leisure and hospitality operations which consistently contribute more than 70% of the group’s earnings.
“Genting’s diversification into the power sector - to reduce its reliance on its leisure and gaming operations - as well as the encouraging performance of its plantations and paper division have also contributed positively to its bottom line,” it said.
It added that the relatively steady stream of cash generated by its power assets had further stabilized Genting’s cashflow, thereby enhancing its debt-servicing ability.
“While Genting has the enviable status of owning Malaysia’s only legal, land-based casino business, it is still vulnerable to intensifying regional competitive pressures,” RAM said.
Nevertheless, according to the rating agency, it believes that the impact on Genting will be somewhat limited given its exposure to high-rollers.
RAM noted Genting’s balance sheet has remained strong with a net cash position of RM2.45bil debt against RM4.17bil of cash and equivalents at end-March. – AFX-Asia
BSDPROP : [Stock Watch] [News] ILB : [Stock Watch] [News] GENTING : [Stock Watch] [News]
Boustead Properties is a 52%-owned subsidiary of Boustead Holdings Bhd (Boustead).
Limited time offer:
Just RM5 per month.
