[RAM] RAM Ratings raises outlook on Cypark Ref's sukuk rating to stable, affirms AA3 rating

RAM Ratings has revised the outlook on the AA₃ rating of Cypark Ref Sdn Bhd’s (Cypark Ref or the Issuer) RM550.0 mil SRI Sukuk Murabahah Programme (2019/2041) (the Sukuk) to stable from negative while concurrently affirming the rating.

The outlook revision follows the completion of two floating solar photovoltaic (PV) plants in Danau Tok Uban, Kelantan (the DTU plants) in January 2025. Along with the ground-mounted Sik plant, operational since January 2022, Cypark Ref will receive steady cashflow from the three 30 MWac solar PV projects (the Projects or the Plants) to service its Sukuk. The RM46.0 mil irrevocable and unconditional bank guarantees (BGs) further anchors the Issuer’s liquidity profile and debt coverage.

Cypark Ref’s liquidity position remains strong, thanks to the support of its shareholders – Cypark Renewable Energy Sdn Bhd (CRE, the engineering, procurement, construction and commissioning contractor), Cypark Resources Berhad (CRB, its ultimate holding company and sponsor) and Jakel Capital Sdn Bhd (largest shareholder of CRB). CRB remains committed to providing ready financial support to Cypark Ref for an upcoming June 2025 sukuk payment, backed by the BG facility. To date, CRB has injected RM31.9 mil into the transaction while maintaining the BGs. 

During the course of the review, we were informed that a planned road construction project by Jabatan Kerja Raya Kedah, Bahagian Jalan, will necessitate the relocation of about 8.7% of the solar panels located at the periphery of the Sik plant. The relocation, anticipated to take six months under RAM’s stressed scenario, could result in a 5.0% energy output reduction in 2025, which is manageable. The Issuer is currently in discussions with the authorities on the relocation exercise and compensation from the government. For prudence, we have included the full additional capital expenditure in our credit assessment. In the meantime, Cypark Ref is preparing information to update the sukukholders in due course. 

Our cashflow analysis indicates that drawdowns from the BG facility will be required if the sponsor does not provide further funding support. In such an event, the transaction is still expected to register strong cashflow coverage, with respective minimum and average finance service coverage ratios (FSCRs, with cash balances) of 1.50 times and 1.74 times, save for June 2026 when the FSCR falls to 1.48 times. A potential shortfall in meeting required finance service reserve account and cash deposit account balances in December 2025 may be easily addressed through a cash infusion from the sponsor or outperformance of the Plants. 

The Sik plant performed well in 2024, with energy output exceeding our expectations by 16.0% due to shorter plant downtime and higher solar irradiance. The DTU plants experienced initial operational setbacks, including the effect of monsoon season. We expect their performance to improve progressively over the year as the teething issues are addressed.

Solar projects are susceptible to solar irradiance variability, regulatory changes and force majeure events, although somewhat moderated by the two different sites of the PV facilities. The DTU plants’ unique susceptibility to lake water levels requires close coordination with local authorities. We also recognise the potential for latent operational issues at the DTU plants owing to prolonged inactivity post-installation.


Analytical contacts
Chong Van Nee, CFA
(603) 2708 8210
vannee@ram.com.my

Neo Xue Wei
(603) 2708 8241
xuewei@ram.com.my

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