[RAM] RAM Ratings affirms JEV's AA3/Stable sukuk rating

RAM Ratings has affirmed the AA3/Stable rating of Jimah Energy Ventures Sdn Bhd’s (JEV or the Company) RM4.85 bil Senior Islamic Medium-Term Notes (IMTN) Facility (2005/2025) based on the Company’s strong cashflow generating ability from a sustained satisfactory operational performance. 

JEV’s finance servicing was strong as indicated by the finance service coverage ratios of 2.54 times and 6.81 times on the respective Senior IMTN repayment dates of 10 November 2023 and 10 May 2024, which was well above the 1.50 times under RAM’s sensitised case, largely due to management’s prudence in distributions. The Company’s healthy cash position ensured ample coverage of Senior IMTN financing obligations. As at end-May 2024, JEV’s designated accounts held RM499 million, more than sufficient to cover the Sukuk’s final repayment of RM41.97 million due on 12 November 2024.

The Company continued to demonstrate operational excellence by earning full Available Capacity Payments for the eight-month period from July 2023 to February 2024 and successfully claimed a net bonus on Daily Utilisation Payments for the period, having met the performance thresholds. Given the performance achieved so far, we expect the Company to satisfy the PPA-stipulated 91.0% threshold for the fourth contract-year block.

However, plunging coal prices caused JEV to book negative fuel margins for the year due to the delay between coal procurement and receiving energy payment receipts from the offtaker. As JEV was not able to fully pass on fuel costs to TNB, the Company reported a pre-tax loss of RM95.8 mil in fiscal 2023 (fiscal 2022: RM280.6 mil pre-tax profit) – a trend observed across coal IPPs in the industry. Looking ahead, margins are expected to improve as coal prices stabilise, evidenced by JEV’s return to the black in the first two months of FY Dec 2024.

JEV is an independent power producer (IPP) that owns and operates a 1,400 MW coal-fired power plant in Port Dickson, Negeri Sembilan (the Plant, comprising two 700 MW units) under a 25-year power purchase agreement (PPA) with Tenaga Nasional Berhad (TNB), the offtaker.


Analytical contacts
Julian Chan
(603) 3385 2486
julian@ram.com.my

Chong Van Nee, CFA 
(603) 3385 2482
vannee@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my