[RAM] RAM Ratings affirms AEON (M)'s AA2/Stable/P1 sukuk ratings

RAM Ratings has affirmed the AA₂/Stable ratings of AEON CO. (M) BHD.’s (AEON (M) or the Company) RM1 billion Islamic Medium-Term Notes (MTN) Programme (2016/2031) and RM2 billion Islamic MTN Programme (2024/-) as well as the P1 rating of its RM2 billion Islamic Commercial Papers Programme (2024/2031). 

The affirmations reflect AEON (M)’s resilient operating performance, underpinned by steady earnings contributions from its property management services (PMS) and a diversified retail geographic footprint, with its customer base across urban and suburban segments. The Company remains Malaysia’s largest mall operator by net lettable area, cementing its strong market position. AEON (M)’s projected credit metrics are still supportive of its ratings despite the competitive retail landscape, and the near-term macroeconomic and regulatory headwinds expected.

Revenue rose 3.2% y-o-y to RM4.26 bil in FY Dec 2024, driven by PMS and retail sales which were up 9.2% and 2.0%, respectively. Operating profit before depreciation, interest and tax (OPBDIT) held steady at RM714.7 mil, although the Company’s margin eased to 16.8% (FY Dec 2023: 17.2%) due to elevated utilities and personnel expenses and a greater share of sales from the lower-margin Foodline segment. In 1Q FY Dec 2025, festive spending boosted revenue and OPBDIT by 6.6% and 9.6% y-o-y, respectively. However, earnings may moderate in the coming quarters amid front-loaded demand as well as weaker business and consumer sentiment from the expanded Sales and Service Tax and ongoing costs-of-living pressures. 

Debt-funded mall upgrades and expansions over the year in review led to higher borrowings and lease-adjusted debt, which stood at RM590.0 mil and RM1.74 bil, respectively, as at 1Q fiscal 2025 (fiscal 2024: RM620.0 mil and RM1.88 bil; fiscal 2023: RM420 mil and RM1.59 bil). The increase in lease-adjusted debt also reflects higher lease liabilities from newly leased spaces and tenancy extensions for existing leased assets. Despite the uptick, its debt coverages remained steady, bolstered by strong first quarter earnings which saw AEON (M)’s lease-adjusted debt-to-OPBDIT and funds from operations debt coverage (FFODC) ratios improved to a respective 1.79 times and 0.52 times (FY Dec 2024: 2.63 times and 0.34 times; FY Dec 2023: 2.24 times and 0.40 times). RAM’s sensitised case indicates that debt coverage and cashflow protection metrics should stay within thresholds required for the current ratings. The adjusted debt-to-OPBDIT and FFODC ratios are expected to range from 3.14 times-3.39 times and 0.25 times-0.29 times, respectively, over the next three years. 

RAM considers AEON (M) a highly strategic subsidiary of Japan-based AEON CO., LTD. (AEON Co.), given strong brand alignment, shared senior management and the Company’s strategic importance to its parent. In our view, extraordinary support from AEON Co. is highly likely, if needed. That said, AEON (M)’s strong standalone credit profile remains adequate to back the current ratings without an uplift for parental support.


Analytical contacts
Tan Yan Choong
(603) 2708 8256
yanchoong@ram.com.my 

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

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