[MARC] MARC Ratings affirms SAJ Capital’s AA-IS rating

MARC Ratings has affirmed its AA-IS rating on SAJ Capital Sdn Bhd’s Sukuk Murabahah of up to RM650 million with a stable outlook.

SAJ Capital is a wholly-owned funding vehicle of Ranhill Capital Sdn Bhd, which holds an 80% stake in Ranhill SAJ Sdn Bhd, the sole provider of source-to-tap water in Johor. As sukuk payments rely on dividends from Ranhill SAJ, the rating reflects Ranhill SAJ’s credit strength.

The affirmation reflects Ranhill SAJ’s strong market position and solid operational track record as the sole provider of essential treated water in Johor. In 2024, water usage increased by 4.2%, driven by steady residential and commercial demand. Alongside tariff hikes during the year, this supported revenue of RM1.8 billion for the 15-month period from January 2024 to March 2025 (15MFY2025) — a 14% annualised increase from FY2023. If 2024 consumption levels continue, revenue is projected to rise by 24%-26% in fiscal year 2026 (July 2025 to June 2026), following the recent tariff adjustments effective 1 August 2025. Cash flow remains stable, with EBITDA ranging from RM500 million to RM640 million and margins of 42%-52%, while cash flow from operations (CFO) has remained between RM350 million and RM500 million over the past five years. In 15MFY2025, EBITDA and CFO were RM797.9 million and RM619.6 million.

While there is some licensing risk, MARC Ratings considers this as low given Ranhill SAJ’s strong track record in water treatment and distribution, as well as its consistent performance against regulatory key performance indicators. Ranhill SAJ is currently in its sixth operating period (January 2024 to December 2026), which reflects its operational capability and strong performance.

Ranhill SAJ’s base case assumes annual dividends of RM120 million over FY2026-FY2028, or RM96 million to SAJ Capital for its 80% share. Under this scenario, SAJ Capital’s financial service coverage ratio averages 1.7x through FY2028, meeting the 1.5x covenant.

Tan Weng Kit, +603-2717 2961/ wengkit@marc.com.my
Haziq Najmuddin, +603-2717 2965/ haziq@marc.com.my
Hafiza Abdul Rashid, +603-2717 2955/ hafiza@marc.com.my