MARC Ratings has assigned a preliminary rating of AIS to HCK Cap Access Berhad's proposed Islamic Medium-Term Notes (IMTN) Programme of up to RM2.0 billion with a stable outlook. HCK Cap Access is a wholly-owned funding vehicle of HCK Capital Group Berhad (HCK). The programme allows for the issuance of senior IMTN and/or subordinated perpetual Islamic notes; the assigned rating only applies to senior IMTN under the programme. The initial issuance under the programme is expected to be up to RM200.0 million.

The assigned rating considers HCK's steady growth in its business and financial performance (albeit revenue remaining at a moderate level), good operating margins from employing technology in business processes, and the potential for stronger growth from planned property launches in the Klang Valley. The rating is, however, weighed down by risks associated with commencing new developmental activities and a highly leveraged balance sheet structure that suggests funding projects through further borrowings would keep leverage at an elevated level.

HCK is currently focused on high-rise mixed developments that are located close to educational institutions. Of these is the SEGI University Group, one of the largest private educational institutions in the country in which the founder, majority shareholder and executive chairman of HCK, Tan Sri Clement Hii Chii Kok, has significant interest. MARC Ratings views that given Tan Sri Clement Hiis status as a prominent businessman, he would be able to continue to provide impetus to support HCKs growth. The rating agency also expects any potential issues arising from conflicts of interest between his various businesses would be addressed.

Stemming largely from their locations, HCK's three ongoing developments have recorded strong response by catering to the accommodation needs of, and capturing footfall from, students and professionals from the educational institutions. Of the total launched gross development value (GD