[RAM] RAM Ratings assigns AAA/P1 ratings to Suria Capital Holdings Berhad

RAM Ratings has assigned initial corporate credit ratings of AAA/Stable/P1 to Suria Capital Holdings Berhad (Suria Capital or Group). The Group is involved in port operations, property development, contract and engineering services, logistics and bunkering services, and ferry terminal operations. The listed Group operates Sabah’s  eight public ports under a 30-year privatisation agreement. These ports serve as the  primary maritime gateway and  regional connectivity for Sabah.

Suria Capital is majority owned (50.73%) indirectly by the Sabah state government (State). Its ratings incorporate an uplift based on RAM’s  assessment of a ‘very high’ likelihood of extraordinary financial support from the State. This is reinforced by its strategic role in Sabah’s logistics infrastructure as well as supporting the State’s energy agenda. Suria Capital’s standalone credit strength is anchored by the stable and recurring cash flows generated by its core port operations, complemented by a near net cash position.

Against ongoing volatility in global trade and shipping markets, Sabah Ports has demonstrated operational resilience, recording flat to marginal growth in cargo throughput. The ongoing federally funded expansion of Sapangar Bay Container Port, to be operated by the joint venture DPW Sabah Sdn Bhd, seeks to double handling capacity and ease yard constraints. Beyond its core port operations, Suria Capital has progressively diversified its earnings by monetising its prime waterfront land through the Jesselton Quay and Jesselton Docklands developments. More recently, the Group joint ventured with Yayasan Sabah to undertake the development of a 100 MW gas peaking plant in Kimanis. Upon commencement, we expect earnings from this segment to be modest during the construction phase. Our projections exclude non-recourse financing and considers only potential dividend contributions from this project.

Despite entering a more capital-intensive investment cycle, Suria Capital's financial profile is expected to remain strong. Under RAM's preliminary sensitivity analysis, the Group's planned investments and capital expenditure through 2029, comprising the Kimanis gas peaking plant and Sabah Ports' expansion initiatives, are assumed to be fully debt-funded. Even under these assumptions, gearing is projected to peak at 0.39 times while funds from operations debt coverage moderating to around 0.23 times. Supported by its conservative balance sheet and strong financial flexibility, the Group remains well positioned to accommodate its anticipated funding requirements while maintaining credit metrics commensurate with the current ratings.

The ratings are moderated by Suria Capital’s concentration in port revenue, which remain exposed to Sabah’s economic activity, commodity production and geopolitical influences on trade flows. The Group also faces a degree of regulatory uncertainty  with the 30-year extension of the concession. While approval in principle was granted in 2022, the extension (sought to 2064) has yet to be formalised.


Analytical contacts
Chew Chiang Lim
(603) 2708 8297
chianglim@ram.com.my

Davinder Kaur Gill
(603) 2708 8220
davinder@ram.com.my

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