[RAM] RAM Ratings affirms Cenergi's AA3/Stable/P1 ratings
RAM Ratings has affirmed Cenergi SEA Berhad’s (Cenergi or the Group) AA3/Stable/P1 corporate credit ratings, along with the AA3/Stable rating of its Senior Sukuk and A2/Stable rating of its Subordinated Perpetual Sukuk under the Group’s RM1.5 bil Senior Sukuk/Subordinated Perpetual Sukuk Programme. The Subordinated Perpetual Sukuk is rated two notches below the Senior Sukuk, reflecting increased loss severity and higher risk of non-performance relative to senior financing obligations.
The ratings benefit from uplift above Cenergi’s standalone credit profile, reflecting its strategic importance to UEM Group Berhad (UEM, senior debt rated AA1(s)/Stable) in advancing the latter’s renewable energy (RE) initiatives. RAM expects there to be a ‘moderate’ likelihood of extraordinary support from UEM, given Cenergi’s indirect ownership via UEM Lestra Berhad’s (UEM Lestra) 92.8% shareholding. As UEM Lestra is newly established, we view that any material financial assistance would ultimately derive from UEM. This expectation of shareholder support is reinforced by recent capital injections totaling RM117 mil over 2023 to 2024.
On a standalone basis, the ratings consider Cenergi’s expanding presence in Malaysia’s RE sector, where it is the market leader in the biogas industry with an estimated 19.8% market share (50.5 MW awarded capacity) as at end-June 2025. As the largest provider of grid-connected palm oil mill effluent biogas under Malaysia’s Feed-in-Tariff scheme, Cenergi benefits from long-term power purchase agreements, attractive tariffs, priority of dispatch, and manageable operating requirements. We view the Group’s operational performance as satisfactory overall, underscoring its strong execution capability.
In the more competitive solar industry, Cenergi is scaling up through collaborations within UEM and other corporate groups. Scheduled completion of solar farms over the next three years, including the 45.0 MWp Kuala Ketil project due for completion by early next year, will help boost the Group’s total installed RE capacity to nearly 150 MW (end-July 2025: 74.7 MW), supporting a more balanced earnings mix between solar and biogas.
Cenergi’s still-small scale and modest financial profile in the RE industry constrain the ratings despite its strong leadership in biogas. Growth momentum may be limited by regulatory RE quotas while feedstock supply volatility could affect plant performance. The Group’s strategic diversification into mini hydro, biomass pellet and biomethane, given its limited track record, introduces execution risks. Hefty upfront capital expenditure, unanticipated operational challenges or lower-than-expected yields from these new segments could strain its financial profile.
Cenergi’s operating revenue increased to RM51.5 mil in 1H FY Dec 2025 (+13.8% annualised y-o-y), though pre-tax loss widened to RM5.4 mil (FY Dec 2024: pre-tax loss of RM0.45 mil) as the newly commissioned pellet business remained loss-making. However, RAM’s cashflow projection, which assumes potential delays in project commercialisation (especially mini hydro plants and biomass pellet sales), indicates that the Group’s credit metrics will stay commensurate with the ratings despite increased debt, supported by ongoing shareholder contributions. Gearing and funds from operations debt coverage levels are projected to average 1.25 times and 0.12 times, respectively, over the next two years.
Analytical contacts
Hani Hamizah Nor Hashim
(603) 2708 8240
hani@ram.com.my
Chong Van Nee, CFA
(603) 2708 8210
vannee@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my