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TEXT-Fitch: IOI's Ratings Unaffected by Xiamen Real Estate Venture

(The following was released by the rating agency)

SINGAPORE, October 12 (Fitch) Fitch Ratings says Malaysia-based IOI Corporation Berhad's (IOI) proposal to undertake a mixed-use property development venture in Xiamen, China through its 99.8% subsidiary, Palmy Max Ltd, will not impact its credit rating. IOI is rated Long-Term Issuer Default 'BBB+' with Stable Outlook.

The cash investment made by IOI in the Xiamen project to date is low in relation to the company's scale of operations, MYR2.58bn cash and deposits and short-term investments in fixed income trust funds of MYR1.78bn outstanding as of 30 June 2012.

Moreover, IOI expects this project to be self-funding in nature and therefore unlikely to further increase financial leverage from 1.44x net debt/operating EBITDA as of 30 June 2012.

Fitch views the Xiamen project as an opportunistic investment and expects IOI to continue focusing on its core businesses of crude palm oil plantations and Malaysian property development.

Keywords: MARKETS RATINGS XIAMENREALESTATEVENTURE