[RAM] RAM Ratings assigns AA3/Stable rating to Avaland's proposed sukuk

RAM Ratings has assigned an AA3/Stable rating to Avaland Berhad’s (Avaland or the Group) proposed RM1 billion Sukuk Murabahah Programme. 

The Group’s credit fundamentals are supported by its improving foothold in the domestic property development business and strong support from its parent, Ayala Land Inc. The rating is also backed by the Group’s healthy margins and anticipated adequate debt coverage amid its growth phase.  

Following the publication of its initial corporate credit ratings in April 2024, Avaland’s business and financial performances for 1Q FY Dec 2024 were largely within our expectations. Revenue and operating profit before depreciation, interest and tax were much higher compared to the previous corresponding quarter at RM214.58 mil and RM40.02 mil, respectively (1Q FY Dec 2023: RM76.58 mil and RM5.78 mil). The markedly improved showing was supported by higher property sales and increased work progress at ongoing projects like Aetas Damansara and Alira Subang Jaya and projects in Cyberjaya. 

In 1Q 2024, the Group launched two projects – Casa Embun Phase 2 in Cybersouth township and Amika Residences in Subang Jaya – with a collective gross development value (GDV) of RM653.80 mil. Next projects to be launched will be the luxury Aetas Seputeh and the affordable Anja Residences & Signature Retail in Bangi, with a total GDV of RM1.0 bil.

As at end-March 2024, the Group’s gearing ratio rose to 0.57 times, albeit still healthy (end-March 2023: 0.42 times), on the back of a heftier debt load. Higher profitability lifted its annualised funds from operations (FFO) debt coverage to 0.26 times in 1Q FY Dec 2024 (1Q FY Dec 2023: 0.06 times). Going forward, gearing is projected to peak at 0.90 times after the drawdown of the proposed sukuk to finance expansion, while FFO debt coverage will stay adequate at about 0.15 times in the next two years.

Table 1: Avaland’s ratings



Analytical contacts
Wong Ee Loo
(603) 3385 2521
eeloo@ram.com.my

Thong Mun Wai
(603) 3385 2522
munwai@ram.com.my