Simah Rating Agency maintains BBB+ Solicited National Scale Entity ratings of Sumou Real Estate Company

Tassnief has maintained long-term national scale entity rating of “(BBB+)’’ (Triple B Plus) and short-term entity rating of “T-3” assigned to Sumou Real Estate Company (‘Sumou’ or ‘the Company’). The assigned ratings reflect adequate creditworthiness, thus low credit risk. Risk profile may exhibit moderately high variation with changes in economic and sector conditions.

Rating Rationale: The assigned ratings take into account the Company’s established track record, strong market position in development management, experienced management, and robust sponsor profile. The ratings also incorporate revenue sustainability and business diversification supported by the Company’s wide geographical presence, and adequate segment and operational diversity. Additionally, the financial profile is underpinned by healthy margins, despite a recent decline, and a low-leveraged capital structure. However, the ratings are constrained by inherent risks of the real estate sector, characterized by high cyclicality, competitive intensity, and elevated execution & selling risks. Ratings also incorporate business and financial profile of Sumou Holding Company which has extensive track record and a sizeable asset base.

The business risk profile incorporates a gradual transition from a low-risk development management model to a real estate development-focused approach, which is inherently more exposed to volatility in raw material prices and selling risks. The contribution of the real estate development segment is expected to remain high in the medium term. However, comfort is derived from its established brand equity and proven track record of the Company. Revenue visibility remains strong, supported by a growing revenue profile and a sound pipeline of projects.

The Company’s financial risk profile reflects healthy margins, although recent declines have been observed due to shifts in the overall business mix. Margins are expected to moderate further, given the increasing contribution of the lower-margin real estate development segment. However, absolute profitability is anticipated to improve, driven by strong revenue growth. Cashflow generation has also remained healthy. Capitalization indicators remain sound, supported by a sizeable paid-up capital and a low-leveraged capital structure. The liquidity profile remains manageable, benefiting from strong financial flexibility, access to funding arrangements, and favorable payment terms.

Rating Triggers: The ratings remain contingent on the Company’s ability to scale operations while maintaining its business and financial risk profile. Although margins have moderated, sustaining a healthy profitability profile remains critical from a ratings perspective. Any material increase in leverage and the resulting deterioration in cash flow coverage indicators could exert downward pressure on the ratings. Maintenance of financial discipline, effective management of funding requirements, and sustaining operational growth will be key determinants of the rating trajectory.