Tropicana Metropark's Paisley Serviced Residences.MARC pointed out Tropicana’s established position in the domestic property industry and its moderate financial risks remain the key rating drivers. KUALA LUMPUR: Tropicana Corporation Bhd’s large unbilled sales of about RM1bil provides earnings visibility through 2023 while it has an established position in the domestic property industry, Malaysian Rating Corporation (MARC) says. It had on Thursday affirmed its A+IS rating on Tropicana’s RM1.5bil Islamic medium-term notes programme with a stable outlook. MARC pointed out Tropicana’s established position in the domestic property industry and its moderate financial risks remain the key rating drivers. “The tough property market conditions have continued to weigh on the group’s sales performance and remains a key moderating factor of the rating. “The group achieved an overall take-up rate of 53.2% for its ongoing projects at end-2020, an improvement from 43.1% at end-2019, ” it said. MARC said the rating agency views Tropicana’s moderate sales performance could risk a further increase in its inventory level from RM286mil at end-2020, as it has an ongoing gross development value (GDV) of RM3.9bil. For 9M2020, Tropicana recorded a 7.0% y-o-y decline in revenue to RM702.4mil on lower sales and slower construction progress. However, operating profit was higher at RM186.2mil (9M2019: RM140.6mil) as more projects neared completion. “Its cash flow from operations, however, was negative mainly due to a large payment for a major land acquisition in Genting Highlands. “Nonetheless, the group maintains a healthy liquidity position. The group’s borrowings have risen to RM3.4bil, leading to an increase in its adjusted debt-to-equity ratio to 0.66 times (end-2019: RM2.5bil; 0.51 times). “Over the near term, the group’s leverage position could increase to about 0.73 times to fund its property development cost, ” MARC said.
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