[MARC] MARC Ratings affirms ratings on DRB-HICOM’s sukuk programmes

MARC Ratings has affirmed its ratings on DRB-HICOM Berhad’s RM3.5 billion Sukuk Programme and RM2.0 billion Perpetual Sukuk Musharakah Programme at AA-IS and AIS. The outlook on the ratings is stable. The two-notch rating differential between the programmes reflects the subordination of the perpetual sukuk to the senior sukuk. The outstanding under the programmes stood at RM2.7 billion and RM550.0 million as of 28 November 2025.

The ratings affirmation reflects the sustainability of DRB-HICOM’s credit profile, driven by the continued strong performance of its automotive segment. Its key subsidiary, PROTON Holdings Berhad (PROTON), has maintained strong sales momentum, capturing an 18.7% share of the total industry volume (TIV) in 1H2025 (1H2024: 18.4%). PROTON’s presence in the sport utility vehicle (SUV) segment since 2018 continues to gain traction. Most recently, the facelifted X50 and e.Mas 5, launched on 24 July and 30 October 2025, recorded delivery of 999 units and 3,000 bookings within the week of launch. As at end-June 2025, PROTON had more than 30,000 outstanding orders across its model line-up, including strong demand for the facelifted X50, supporting earnings visibility. For 2024, PROTON’s revenue and pre-tax profit remained stable at RM9.3 billion and RM251.5 million (2023: RM9.4 billion; RM248.2 million).

DRB-HICOM also distributes other marques including Honda, Mitsubishi, and Isuzu, contributing to a combined 116,476 vehicles sold in 1H2025, and an overall market share of 31.2%. The automotive segment is expected to remain a key contributor to the group’s performance through dividend flows and loan repayments from PROTON and other subsidiaries. Recent launches — including PROTON’s e.MAS 7, the facelifted X50, and e.MAS 5; and Honda’s battery electric vehicle (BEV), e:N1, as well as facelifts of the Civic and HR-V — are expected to support demand. Notwithstanding this, future growth may moderate due to high base effects from exceptional TIVs between 2022 and 2024, as well as evolving consumer behaviour and financing conditions.

The ratings also consider DRB-HICOM’s sizeable landbank, which offers an avenue to raise liquidity, including through the planned disposal of land to the upcoming Automotive Hi-Tech Valley (AHTV) development. Expansion plans, including PROTON’s investment in its AHTV facilities, are anticipated to be funded at the subsidiary levels, allaying concerns about financial pressure on the holding company. Dividend income, meanwhile, is expected to largely be derived from key subsidiaries with stable operations, such as the intermediate holding company of group assembly and trading business HICOM Holdings Sdn Bhd, and assembler and distributor Honda Malaysia Sdn Bhd.

Pos Malaysia Berhad (Pos Malaysia) is still undergoing a turnaround. Despite cost optimisation and revenue diversification efforts, Pos Malaysia posted wider pre-tax loss of RM79.9 million on RM908.6 million in revenue in 1H2025 (1H2024: -RM66.5 million; RM935.4 million). Pos Malaysia continues to grapple with costs associated with the provision of services mandated under the Universal Service Operator licence which have not been commercially viable. The group is working with the government to find an appropriate compensation mechanism. The group also derives recurring, albeit modest, earnings from its concession assets. It also continues to benefit from a RM6.7 billion order book at CTRM, an aircraft component manufacturer, providing earnings visibility through 2038.

In 1H2025, group revenue rose to RM8.3 billion, but pre-tax profit declined to RM215.8 million due to higher costs and weaker performance from joint ventures and associates. Group borrowings (ex-Bank Muamalat) stood at RM6.6 billion, mostly at the holding company (49.5%) and PROTON (26.4%), with adjusted debt-to-equity (DE) and net DE ratios remaining manageable at 0.69x and 0.47x.

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