[RAM] RAM Ratings assigns ratings to DNeX's maiden sukuk programme

RAM Ratings has assigned ratings of A₁/Stable and A₃/Stable to Dagang NeXchange Berhad’s (DNeX or the Group) proposed RM3.0 bil Senior Islamic Medium-Term Notes and Subordinated Perpetual Islamic Notes Programme.

The ratings reflect the Group’s diversified business profile. Its three core businesses (semiconductor, energy and IT) contributed a respective 61%, 23% and 16% to Group revenue for FY Dec 2025. In our view, DNeX’s market position in the semiconductor and IT businesses is protected by barriers to entry, including high capital intensity and long operating track record, technical expertise, and the strategic importance of certain assets to the nation. The Group has strengthened its operational capabilities through strategic partnerships with global players, such as Google (Google Distributed Cloud services), Interuniversity Microelectronics Centre (semiconductor process technology), and fellow upstream player Hibiscus Petroleum (management of United Kingdom oilfield assets).

DNeX’s financial profile is currently underpinned by its conservative leverage and healthy liquidity. As at end-December 2025, outstanding borrowings stood at RM132.8 mil, with gearing ratio of 0.08 times. The Group also retained its net-cash position with available liquidity of RM299.6 mil. Going forward, projected gearing is expected to rise to moderate 0.7-0.8 times by end-2027 as the Group draws down on the rated sukuk to fund its three-year capex commitments of RM1.6 bil.

DNeX’s operational cash flow generation, while positive, has been volatile due to the cyclicality of its business as well as working capital requirements for ongoing projects. The quantum of cash flows has also been limited by the scale of its businesses at this juncture. Notwithstanding this, coverage ratios remain strong, owing mainly to the Group’s low debt levels. For FY Dec 2025, DNeX’s respective funds from operation debt coverage (FFODC) and operating cash flow debt coverage stood at a strong 0.76 times and 1.35 times. Following debt drawdowns for its projected capex, FFODC is expected to remain strong at above 0.20 times up to FY Dec 2029 based on conservative crude oil price assumptions.

Moderating the ratings are DNeX’s exposure to cyclical, regulatory and contract renewal risks, particularly for its semiconductor and energy businesses. The current Gulf crisis presents potential upside for DNeX’s credit metrics via elevated crude oil and gas prices. On the flipside, prolonged disruptions to global shipping and logistics could adversely affect upstream project execution schedules and costs, with knock-on implications for cash flow and debt protection measures. The Group also recorded high net cash outlays over the past four years due to its substantial historical capex. This trend is expected to continue with its planned capex outlays mainly for oilfield development as well as new IT proposals for the Government. We expect the Group to preserve cash for this purpose and exercise prudence in dividend distributions to maintain its credit profile.


Analytical contacts
Neo Xue Wei, CFA
(603) 2708 8241
xuewei@ram.com.my

Thong Mun Wai 
(603) 2708 8255 
munwai@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my