[MARC] MARC Ratings affirms Alam Flora’s MARC-1IS/AAIS ratings

MARC Ratings has affirmed its MARC-1IS/AAIS ratings on Alam Flora Sdn Bhd’s RM700 million Islamic Commercial Papers/ Islamic Medium-Term Notes (ICP/IMTN) Programmes with a stable outlook.

The affirmation reflects Alam Flora’s stable cash flows under its 22-year waste collection and public cleansing concession agreement with the government (ending 31 August 2033), strong liquidity, and proven operational performance, while also considering the execution risks associated with the expansion of its non-concession businesses.

Alam Flora’s company-level revenue declined by 0.3% to RM787.7 million in 2024, primarily due to the expiry of a contract in June 2023. This impact was partially offset by growth in the concession business, supported by new developments within existing scheme areas. Alam Flora anticipates this segment to grow by 1%-2% annually. Additionally, a scheduled fee revision in 2025 — conducted every seven years to align with current cost structures — is expected to support revenue growth in 2026.

Alam Flora has reduced its previously planned capex, particularly in non-concession areas such as building renovations, thereby lowering its financing needs. It has earmarked RM272.5 million over the next three years for concession-related asset replacements, which are expected to be internally funded. With strong liquidity and RM334.2 million in cash as of end-2024, Alam Flora is well-positioned to meet these requirements. Capital needs for new non-concession projects are also expected to decline, as several pre-development initiatives have been scaled back or deferred.

As of end-2024, Alam Flora had no borrowings, maintaining a clean balance sheet. Based on current borrowing plans, the consolidated net debt-to-equity ratio is projected to rise moderately to 0.17x by 2028.

Ahmad Kamal Syauki, +603-2717 2958/ kamal@marc.com.my
Umar Abdul Aziz, +603-2717 2962/ umar@marc.com.my
Sharidan Salleh, +603-2717 2954/ sharidan@marc.com.my