KOTA KINABALU: RAM Ratings has affirmed SMJ Energy Sdn Bhd’s AAA/Stable rating on its Multi-Currency Islamic Medium Term Notes (Sukuk Wakalah) Programme of up to RM10 billion, citing the company’s strategic role and strong link to the Sabah state government.
The rating reflects SMJ Energy’s mandate as Sabah’s state-owned oil and gas company and RAM’s view that extraordinary financial support from the state government would be almost certain if required.
SMJ Energy was established under a Commercial Collaboration Agreement with PETRONAS to manage Sabah’s oil and gas resources, boost state revenue, and support energy security in line with the Sabah Energy Roadmap and Master Plan 2040.
For the financial year ended December 2024, SMJ Energy’s revenue rose 11.7 pc year-on-year to RM972.4 million, supported by full-year contributions from its investments despite lower crude oil prices.
Operating profit before depreciation, interest and tax surged 72.4 pc to RM370.4 million due to lower operating costs. However, RAM expects revenue and profit to soften in FY2025 amid continued lower oil prices.
The group’s gearing ratio improved to 0.83 times as at end-2024 from 1.17 times a year earlier, driven by stronger profits and repayment of short-term borrowings.
Operating cashflow debt cover also improved to 0.53 times.
SMJ Energy issued RM400 million in debt this year to fund acquisitions and capital expenditure, which is expected to raise gearing to a still-manageable level of around one time.
SMJ Energy has entered into agreements to expand its upstream presence, including acquiring a 25 pc stake in Petronas PFLNG 3 Sdn Bhd, with operations targeted for late 2027 or early 2028, and a proposed 20 cp interest in the North Sabah Enhanced Oil Recovery PSC, expected to be completed by early 2026.
RAM said the financial impact of these acquisitions will depend on their final structure and the cashflow generated from the investments.
