[RAM] RAM Ratings affirms Ranhill Solar Ventures' sukuk at AA3

RAM Ratings has affirmed its AA₃/Stable rating of Ranhill Solar Ventures Sdn Bhd’s (RSV or the Issuer) Sukuk Murabahah Programme of up to RM310 mil (2022/2042) (the Sukuk).

The affirmation is premised on the sound operational and financial performance of the 50 MWac solar photovoltaic (PV) plant (the Plant) owned and operated by its sister company Ranhill Solar I Sdn Bhd in Bidor, Perak. The Plant’s strong operational performance continues to support resilient cash flow generation and steady debt servicing capacity. RSV serves as the funding conduit for the Sukuk and received timely and predetermined cash flows from RSI, via an intercompany financing agreement, that supports cashflow certainty to meet its sukuk profit and principal obligations.

In 2025 and 1H2026, the RSI solar plant output reached 92% and 98% of the pro-rated declared annual energy quantity under its power purchase agreement (PPA) with Tenaga Nasional Berhad, well above the PPA threshold of 70%, and modestly exceeded our sensitised projections. This was despite weaker irradiance and increased rainfall experienced during the monsoon months.

The Plant’s average monthly availability of 99% supports stable energy generation, and reinforces our view of continued earnings visibility and cash flow resilience. In fiscal 2026 (reflecting the plant’s first full operating year), RSV’s financial performance registered broadly in line with our sensitised projections. RSI’s revenue and operating profit before depreciation, interest and tax (OPBDIT) for financial year ending June 2026 came in at RM17.7 mil and RM13.0 mil, respectively, with a robust 73.4% OPBDIT margin. Including higher cash balances due to lower distributions, higher revenue and interest income, RSV is projected to maintain robust annual FSCRs (post-distribution, with cash balances) of at least 1.64 times and an average 2.24 times, supporting the affirmed rating.

The transaction provides cashflow leakage safeguards through a pre-determined cashflow waterfall, designated accounts and budgetary controls requiring sukukholders’ approval for cost overruns exceeding 10% (as compared to estimates during the transaction initial rating). Minimum finance service reserve account (FSRA) and maintenance reserve account (MRA) balances ensure cash retention within the structure, limiting the risk of excessive dividend leakages. This transaction also imposes a more restrictive distribution covenant which permits dividend distributions only if the rating of the Sukuk is not adversely affected or downgraded below AA₃. Our estimated dividend of only RM4.0 mil throughout the Sukuk tenure, balances the FSRA and MRA reserving requirements against potential cash flow pressures arising from the Sukuk’s uneven amortisation profile. The Sukuk’s repayment profile necessitates prudent cash retention, as excessive early distributions could weaken liquidity ahead of higher debt servicing obligations in later years.

The Plant remains exposed to the variability of solar irradiance, performance risks and regulatory developments, although strong policy support from both the Federal and the Perak State government are positive for large-scale solar projects. As a single-asset company, RSI is also susceptible to force majeure and event risks, although this is mitigated to some extent by insurance coverage, the modular design of the Plant and its large site.


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Neo Xue Wei, CFA
(603) 2708 8241
xuewei@ram.com.my

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

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(603) 2708 8212
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