MARC Ratings has assigned a preliminary rating of AAIS to Evyap Sabun Malaysia Sdn Bhd’s (Evyap Malaysia) proposed RM1.0 billion Sukuk Wakalah Programme. Concurrently, the rating agency has affirmed Evyap Malaysia’s RM500.0 million Sukuk Wakalah Programme rating at AAIS. The outlook on the ratings is stable.
The rating considers Evyap Malaysia’s vertically integrated and sizeable oleochemical operations, its diversified customer base, and its healthy operating performance. These strengths are moderated by exposure to feedstock price volatility and increases in transportation and distribution costs that could exert pressure on margins.
Operating from its facility in Tanjung Langsat, Johor, Evyap Malaysia is one of the largest vertically integrated oleochemical producers in Malaysia, with a diversified product portfolio comprising multi-chained fatty acids, soap noodles, glycerine, esters and bar soaps. MARC Ratings views the company’s operational flexibility positively, particularly its ability to serve a broad customer base across more than 100 countries. The credit profile is further underpinned by the technical expertise and operational track record of its Türkiye-based parent, Evyap Group, as well as its Roundtable on Sustainable Palm Oil (RSPO) certification, which enhances access to export markets, particularly in Europe.
Evyap Malaysia maintained healthy sales and production levels for its oleochemical products in 2025. Utilisation for fatty acids remained stable at 80.1%, while glycerine and esters continued to record strong utilisation rates of 85.4% and 92.0%. The company’s annual bar soap production capacity of 108,000 MT is positioned to support longer-term demand growth, although utilisation remained modest at 51.2%. The ramp-up of the Indonesian operations from March onwards is expected to enhance cost efficiency and provide greater flexibility in capacity allocation across facilities to serve differing customer demands.
The new oleochemical manufacturing facility in Medan, Indonesia, built on a 40-acre site at a cost of RM520.0 million, commenced operations in February 2026. The facility, with an annual capacity of approximately 240,000 MT of fatty acids, glycerine, and soap noodles, is strategically located near feedstock suppliers, established oleochemical players, and key transportation infrastructure. MARC Ratings views the expansion positively as it could enhance cost competitiveness through access to a broader range of palm oil sources, supporting demand growth in price-sensitive markets. The Indonesian operations will benefit from tax exemptions of up to 20 years, supporting earnings and cash flow, particularly during the ramp-up and stabilisation phases of the plant.
In 2025, total sales volumes moderated, mainly due to lower order volumes from the US, although strong internal consumption continued to support overall utilisation levels. Notwithstanding the lower sales volume, revenue increased 5.4% y-o-y to RM2.3 billion from favourable selling prices during the year. Operating profit margin moderated to 5.9%. The impact of market-driven input cost is partially managed through the group’s cost-plus pricing approach.
As at end-2025, total borrowings remained manageable at RM583.7 million. Evyap Malaysia redeemed RM100.0 million sukuk under the rated programme in December 2025. Including the drawdown of around USD32 million in loans for the Indonesian operations, debt-to-equity ratio rose to around 0.56x by end-2025 (2024: 0.50x). Proceeds from the initial issuances from the new sukuk programme will be used to redeem sukuk maturing in 2026, and fund Evyap Malaysia’s capex and working capital requirements. Debt protection metrics remained healthy, supported by strong cash flow from operations, with interest and debt coverage ratios of 8.4x and 0.3x.