[MARC] MARC Ratings affirms Evyap Malaysia’s rating of AAIS

MARC Ratings has affirmed Evyap Sabun Malaysia Sdn Bhd’s (Evyap Malaysia) RM500.0 million Sukuk Wakalah Programme rating at AAIS. The rating outlook remains stable.

The rating continues to be supported by Evyap Malaysia’s vertically integrated and sizeable oleochemical operations, diversified customer base, and healthy operating performance. These strengths are moderated by exposure to feedstock price volatility and increases in transportation and distribution costs that could exert pressure on margins.

Based in Tanjung Langsat, Johor, Evyap Malaysia is one of the largest vertically integrated oleochemical producers in the country, manufacturing multi-chained fatty acids as its primary products, along with soap noodles, glycerine, esters, and bar soaps. MARC Ratings views positively the company’s operational flexibility to allocate its oleochemical capacity in response to the demands of its customers in more than 100 countries. Evyap Malaysia benefits from the experience of its Türkiye-based parent, Evyap Group, which has a track record of over 90 years in manufacturing and distributing personal care products in Europe and the Middle East. RSPO-certified, Evyap Malaysia’s products would appeal to sustainability-conscious customers, strengthening its global market reach, particularly in Europe.

Evyap Malaysia has maintained high utilisation levels across its production lines. In 1H2025, its 360,000 MT fatty acid capacity recorded a utilisation rate of 79.8%, reflecting sustained demand. The glycerine and ester production facilities also registered strong utilisation rates of 83.1% and 90.3% despite the recent expansion of the ester production capacity to 20,000 MT p.a. MARC Ratings views positively the company’s establishment of a new plant in Medan, Indonesia, as the expected lower production cost would allow Evyap Malaysia to tap further into more cost-sensitive markets for basic oleochemical products, while expanding its specialty fatty acids production in Malaysia.

The company’s new oleochemical facility in Medan, located on a 40-acre site, is estimated to cost RM560.0 million. To date, it has incurred about RM350.0 million, partially funded through proceeds from the rated sukuk. The remaining construction cost could be funded through a USD40.0 million term loan facility from a bank in Indonesia. Slated to commence operations in January 2026, the facility will produce fatty acids, glycerine, and soap noodles, with an estimated annual capacity of 240,000 MT. Sales functions will continue to be centralised in Malaysia while procurement and logistics will be undertaken by the local office in Indonesia.

In 1H2025, total sales volume rose to 215,142 MT (1H2024: 208,667 MT), reflecting a stronger demand for bar soaps, fatty acids, and esters. This translated into a 16.5% y-o-y increase in revenue to RM1.3 billion during the period. The operating profit margin remained healthy at 11.4%, supported by improved facility utilisation despite elevated input and energy costs, particularly in natural gas prices. The impact of market-driven input cost is partially managed through the group’s cost-plus pricing approach.

As at end-June 2025, total borrowings stood at RM525.8 million, largely comprising the RM500.0 million outstanding under the fully issued rated sukuk programme. Borrowings are expected to increase to around RM700.0 million by end-2025 to fund the group’s new manufacturing facility in Medan, Indonesia. The debt-to-equity (DE) ratio could increase to about 0.63x (1H2025: 0.47x). Liquidity remains strong, supported by cash balances of RM365.5 million as at end-1H2025, after a dividend payout of RM131.0 million. The RM100.0 million sukuk maturing in December 2025 is expected to be refinanced; the company plans to complement this with the establishment of a new sukuk programme in the near term. In 2024, it registered cash flow from operations (CFO) of RM124.1 million, providing strong interest and debt coverages of 7.43x and 0.18x. Assuming annual CFO remains at 2024 levels and inputting the debt trajectory to fund the remaining construction of the Medan facility, interest and debt coverage measures are expected to be around 3.63x and 0.18x.

Chong Wat Son, +603-2717 2929/ watson@marc.com.my
Vanessa Leong, +603-2717 2931/ xinyue@marc.com.my
Taufiq Kamal, +603-2717 2951/ taufiq@marc.com.my