[RAM] RAM Ratings assigns initial ratings to Qualitas Medical Limited Group entities

RAM Ratings has assigned AA₃ ratings to Ameetaz Capital Sdn Bhd (Ameetaz Capital), the holding company of Qualitas Medical Limited (Qualitas or the Group) and concurrent AA₃ and A₂ ratings to the sukuk to be issued under the RM2.5 bil Senior Islamic Medium-Term Notes and Subordinated Perpetual Islamic Notes Programme (Sukuk Programme).



Incorporated in Singapore, Qualitas is a regional primary healthcare provider with established presence in Malaysia, Singapore and Australia. It has a long operating history dating back to 1997. The Group operates general practice clinics, dental clinics, medical imaging centres, therapy and rehabilitation centres, ambulatory care centres, specialist eyecare centres and retail chain pharmacies. These facilities were grown organically and through acquisitions. Dato’ Dr Noorul Ameen Mohamed Ishack, a qualified medical practitioner and founder of Qualitas, and Southern Capital Group (SCG) are the ultimate shareholders of the Group, owning a collective 78.7%. Sojitz Corporation, a Japanese investment holding company, holds the remaining 21.3% stake.

Ameetaz Sdn Bhd (Ameetaz), Ameetaz Capital and Qualitas Sukuk have been set up as part of a larger corporate reorganisation exercise to facilitate long term funding and an eventual listing of Qualitas. The proposed reorganisation exercise, expected to be concluded by end-March 2025 (Figure 1) will result in Ameetaz Capital, via QML Shares SPV acquiring 78.7% of Qualitas. The acquisition will be satisfied in cash and redeemable convertible preference shares (RCPS) to be issued by Ameetaz to Vendors SPV. At the same time, Ameetaz Capital will recognise an advance from Ameetaz equivalent in amount to the RCPS. A total of SGD227.42 mil RCPS and advances from Ameetaz will be subordinated to the Programme. The initial issuance of RM680 mil (SGD205 mil) in nominal value from the Programme will fund the cash portion of the acquisition and an SGD106 mil advanced to Qualitas to refinance its existing borrowings, with the balance used to defray transaction expenses and injected into Qualitas. The same shareholders will remain post-corporate exercise.



The AA₃/Stable/P1 corporate ratings assigned to Ameetaz Capital reflect the credit strength of Qualitas as its core subsidiary. Qualitas has a robust market position across its core markets. As of end-December 2024, the Group owned 135 facilities in Malaysia, 53 in Australia and 29 in Singapore, along with another 151 affiliate and associate clinics in Malaysia. RAM views the resilient and encouraging long-term growth prospects for private outpatient care in these markets as a positive rating factor. This is demonstrated by Qualitas’ consistently stable cash flow generation and healthy debt coverage ratios ranging between 0.15 to 0.21 times in the last five years. 

Over the next few years, the Group is set to accelerate its pace of expansion via acquisitions of brownfield healthcare chains and clinics. These acquisitions, targeted to total up to SGD156 mil by fiscal 2027 are primarily focused in Malaysia and Singapore. While we view this pace as aggressive, we derive comfort from Qualitas’ experienced management and M&A teams that have a proven track record of successful acquisitions and operations thereafter.  These brownfield facilities are expected to be readily earnings accretive.  

In our financial analysis, we have assigned the subordinated perpetual sukuk 50% equity credit, while the advance from Ameetaz is structured as fully equity in nature. The key terms of the advance mirror those of the RCPS’, such as non-cumulative dividends, replacement with proceeds from share issuance and subordinated to all senior debts and the Sukuk Programme. 

Given the concurrent rise in debts and equity, alongside earnings accretive acquisitions, Ameetaz Capital’s adjusted gearing is anticipated to gradually improve to about 0.75 times by end-2027 from sub-0.90 times post-corporate exercise and the Group’s debt-to OPBDIT ratio, a supplementary leverage ratio, moderating to 3.5 times. Though gearing levels are higher for the assigned ratings, we consider this tolerable given the defensive nature of the sector and the future growth of the business with stable cashflows. Our scenario analysis indicates that forward funds from operations debt coverage is likely to temporarily dip to 0.19 times this year (from 0.23 times in FY Dec 2023) before gradually improving to 0.23 times by 2027. 

The ratings are constrained by the Group’s aggressive expansion strategy, relatively elevated gearing levels and exposure to foreign exchange risks due to its operations in three countries. 


Analytical contacts
Ben Inn
(603) 3385 2510
ben@ram.com.my

Thong Mun Wai
(603) 3385 2522
munwai@ram.com.my

Media contact
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(603) 3385 2500
sakinah@ram.com.my