[RAM] RAM Ratings affirms PKPP's RM650 mil Sukuk Wakalah at AA3(s)

RAM Ratings has affirmed the AA₃(s)/Stable rating of Perbadanan Kemajuan Pertanian Negeri Pahang’s (PKPP or the Agency) RM650 mil Sukuk Wakalah Programme (2020/2050), based on its strong financial metrics and debt repayment capacity, supported by its net cash position and favourable crude palm oil (CPO) prices.

As a key statutory body driving Pahang’s agricultural development and, to a lesser extent, fulfilling social mandates, the Agency benefits from a moderately high likelihood of extraordinary state support in the event of financial distress. 

The issue rating also benefits from one-notch uplift owing to the strength of the security package pledged to sukukholders – indicated by the suffix (s) – comprising primarily plantation land, mills and buildings. As of end-December 2024, the security cover ratio was 3.88 times, well-above the minimum 1.67 times required to maintain the enhancement. That said, PKPP’s relatively small scale, limited operating efficiencies, high-cost structure and below average operating metrics continue to weigh on the rating. 

In FY Dec 2024, PKPP’s revenue and operating profit before depreciation, interest and tax (OPBDIT) surged 26.2% and 162.4%, respectively, aided by markedly higher CPO prices and the resolution of labour shortage. Cash holdings of RM730.7 mil as at end-June 2025 amply covering total debt of RM490.1 mil, supporting a strong liquidity profile over the medium term. Continued improvement in the Agency’s financial performance and gradual repayment of sukuk obligations, are projected to moderate gearing to between 0.06 times to 0.13 times while funds from operations debt coverage is anticipated to maintain at a healthy 0.17 times to 0.31 times under RAM’s sensitised case.


Analytical contacts
Nur Hadhirah Binti Bahrom 
(603) 2708 8207
hadhirah@ram.com.my

Hani Hamizah Nor Hashim
(603) 2708 8240
hani@ram.com.my

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