RAM Ratings has affirmed SMJ Energy Sdn Bhd’s (SMJE) AAA/Stable rating for its RM10 billion Multi-Currency Islamic Medium Term Notes Programme.
This rating reflects SMJE’s crucial role in Sabah’s energy sector, strong State Government backing and robust cash flow generation.
RAM Ratings is the leading and largest credit rating agency in Malaysia and South-East Asia.
As Sabah’s State-owned oil and gas company, SMJE plays a vital part in developing the State’s energy resources, increasing revenue share for the Government and enhancing energy security.
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In 2023, SMJE expanded its portfolio by acquiring stakes in various energy assets, including a 50 per cent interest in the Samarang Production Sharing Contract and a 25 per cent stake in Petronas Chemicals Fertiliser Sabah Sdn Bhd.
The company also purchased Sabah International Petroleum Sdn Bhd, which included a 10 per cent stake in Petronas LNG9 Sdn Bhd.
Despite a high gearing ratio of 1.12 times as of December 2023, SMJE maintained a strong net operating cash flow (OCF) debt cover of 0.45 times.
The company’s financial performance was impressive in FY 2023, with revenue reaching RM952.37 million and OCF of RM695.11 million. SMJE also paid RM50 million in dividends to the State Government.
Looking ahead, SMJE continues to negotiate with Petronas for additional oil and gas assets.
While these acquisitions may require debt funding, they are expected to be self-sustaining and contribute positively to the company’s growth.
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