[RAM] RAM Ratings assigns AA2(s)/Stable rating to proposed RM2.0 bil sukuk to be issued by Genting Plantations vehicle

RAM Ratings has assigned an AA2(s)/Stable rating to Benih Restu Berhad’s proposed RM2.0 bil Sukuk Wakalah Programme (the Programme). 

The issue rating reflects Genting Plantations Berhad’s (the Group) credit profile, given the irrevocable and unconditional corporate guarantee on the sukuk from the Group. Benih Restu is a wholly owned funding conduit of Genting Plantations. Proceeds from issuance under the Programme will partly refinance sukuk maturing in 2025 and meet general corporate funding requirements. The Group’s existing ratings (see Table 1) were last affirmed on 2 November 2023. 

Since our last review, Genting Plantations’ business and financial performances have been largely within expectations. Notwithstanding continued pressure on the downstream segment, the Group’s revenue and operating profit before depreciation, interest and tax (OPBDIT) improved y-o-y in 2H FY Dec 2023 on the back of stronger fresh fruit bunch (FFB) production and a largely stable average crude palm oil (CPO) selling price. This translated to a smaller topline contraction of 7% y-o-y in fiscal 2023, seeing revenue come in at RM3.0 bil. Full-year OPBDIT was correspondingly weaker at RM735.94 mil (FY Dec 2022: RM1.03 bil) due to normalising palm product prices and still elevated costs. FFB production, however, climbed 6.2% y-o-y to 2.11 mil MT in 2023, the first annual increase since 2019 owing to a favourable tree age profile and an expanded harvesting area in the Group’s Indonesian estates.

Balance sheet strength and cashflow debt coverage were also largely within expectations. Against the backdrop of normalising CPO prices in 2023, the Group’s net gearing ratio and funds from operations (FFO) were weaker at 0.19 times and 0.58 times, respectively (FY Dec 2022: 0.16 times and 1.01 times). These metrics are still strong and supportive of the current ratings. Our sensitised projections indicate that net gearing will be around 0.23 times while FFO net debt coverage will stay robust at 0.55 times in fiscal 2024. The blended CPO price assumption for 2024 in the sensitised case is maintained at RM3,122/MT.

Analytical contacts
Sean Lim, CFA 
(603) 3385 2550

Thong Mun Wai 
(603) 3385 2552

Media contact
Sakinah Arifin
(603) 3385 2500