[RAM] RAM Ratings assigns first time A1/Stable/P1 ratings to Samaiden's Unguaranteed Rated Sukuk Wakalah
RAM Ratings has assigned Corporate Credit Ratings of A1/Stable/P1 to Samaiden Group Berhad (Samaiden or the Group). Concurrently, RAM has also assigned a A1/Stable/P1 rating to the rated, unsecured and unguaranteed tranches (Unguaranteed Rated Sukuk Wakalah) to be issued under Samaiden’s multi-currency Islamic commercial papers (ICP) programme of RM500 mil and Islamic medium term notes (IMTN) programme of RM1 bil (collectively, the Sukuk Wakalah).
Under the Sukuk Wakalah, Samaiden has the flexibility to issue rated or unrated Sukuk. Additionally, these may include: (1) unguaranteed and unsecured Sukuk which rank at least pari passu with Samaiden’s other senior unsecured obligations; (2) secured and/or unsecured Sukuk that carry a guarantee, and/or (3) secured Sukuk, without any guarantee. The rating(s) for rated guaranteed and/or secured Sukuk may differ and will be assessed separately if Samaiden opts for such issuances.
The ratings are underpinned by Samaiden’s established foothold in the domestic solar engineering, procurement, construction and commissioning (EPCC) space, healthy order and tender books, improving financial performance and expectations that it will maintain adequate credit metrics commensurate with the A1 rating even as the Group pursues asset ownership and explores regional opportunities. The rating also incorporates RAM’s expectation that Samaiden will maintain or grow its market share and presence in the domestic renewable energy (RE) EPCC field and remain prudent in its growth aspirations. The credit strengths are moderated by order book replenishment risk, a fragmented and competitive solar EPCC environment, and exposure to unpredictable equipment and material prices.
As at end-November 2024, Samaiden had installed more than an estimated 500 MW of solar systems under the various solar programmes launched by the Government of Malaysia, equivalent to about 10% share of the domestic solar EPCC market (spread across large-scale solar farms and solar systems for residential as well as commercial and industrial segments). Meanwhile, the Group’s order book stood at RM313.5 mil, equivalent to 1.4 times of FYE 30 June 2024 (FY June 2024) revenue.
The Government’s supportive policies on RE are expected to remain key in supporting business and financial prospects. Reflective of that, Samaiden’s topline had tripled to RM227.2 mil in FY June 2024 from RM76.2 mil in FY June 2020, whilst achieving respectable margins. Its margins on operating profit before depreciation, interest and tax ranged 7% - 14% in the last five fiscal years is comparable to the levels achieved by some of its solar EPCC peers. In FY June 2024, Samaiden recorded a pre-tax profit of RM22.0 mil (+63.9% y-o-y).
As at end-June 2024, Samaiden had minimal debt (gross gearing of 0.08 times) and was in a net cash position, with RM132 mil of cash against about RM11 mil of debt. The latter, comfortably covered by annual cash-generation (or funds from operations) averaging RM14 mil in the last three years, mostly comprised short-term lines for working capital, reflecting the relatively short tenure of smaller-scale solar projects and/or to bridge temporary gaps between progress payments for larger endeavours. The debt profile and debt-mix are, however, expected to evolve.
In the medium to longer term, Samaiden aspires to take ownership of larger-scale solar assets as well as other RE technologies like bio-energy and mini-hydro. The Group is also exploring regional expansion, although this is still at an early stage. If successful, ownership of RE projects would bolster Samaiden’s recurring revenue base (which is credit positive) but will also entail higher debt. The assigned ratings currently consider Samaiden’s plans to gear up to the tune of RM790 mil by end-FY June 2029. The bulk of this will relate to the development of its own RE assets, which Samaiden plans to fund with non-recourse project finance (NRPF) debt. On this basis, and under RAM’s sensitised scenario, Samaiden’s gearing ratio (excluding NRPF debt) is expected to peak at about 0.70 times, with funds from operations debt coverage ratio ranging 0.18 – 0.37 times.
Analytical contacts
Chuan Shyang Lin
(603) 3385 2536
shyanglin@ram.com.my
Chong Van Nee
(603) 3385 2482
vannee@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my