MARC Ratings has affirmed its AAIS rating on Tadau Energy Sdn Bhd’s outstanding RM215.0 million ASEAN Green Sustainable and Responsible Investment Sukuk Wakalah with a stable outlook. Tadau Energy owns and operates two solar photovoltaic plants in Kudat, Sabah.
The rating is underpinned by the 21-year power purchase agreements with Sabah Electricity Sdn Bhd (AAA/Stable), which effectively transfer demand risk to the offtaker. Rating constraints stem from solar irradiance variability and operational risks inherent in renewable energy generation.
Operating performance remained stable in 2025, with plant availability exceeding 99% across both facilities. Energy generation totalled 75,702 MWh, moderated by weaker solar irradiance during the Northeast Monsoon season in early 2025. Output recovered in 1H2026, with generation reaching 41,508 MWh, equivalent to 51.3% of the projected full-year production.
Revenue of RM46.6 million in FY2026 was 1.3% below projections, mainly due to weaker weather conditions in 1HFY2026, which affected energy generation. Pre-tax profit fell to RM4.6 million, reflecting higher administrative expenses related to the refinancing of existing project debt through the rated sukuk. Consequently, total borrowings increased to RM213.0 million as at end-FY2026 from RM155.0 million a year earlier.
Adjusted cash flow from operations decreased to RM23.4 million in FY2026 from RM31.9 million in FY2025, in line with the lower earnings. Nevertheless, debt-servicing capacity remained robust, with the finance service coverage ratio (FSCR) standing at 2.59x. As envisaged at issuance, Tadau Energy distributed RM52.0 million in dividends and advanced RM77.2 million to its shareholder, funded by sukuk proceeds and existing cash reserves. Consequently, cash balances declined to RM36.7 million as at end-FY2026 from RM92.9 million a year earlier, but remain sufficient to meet the RM24.4 million sukuk payment due in December 2026.
The transaction continues to demonstrate adequate cash flow resilience, with projected average and minimum pre-distribution FSCRs of 2.08x and 1.75x. Sensitivity analysis indicates that debt-servicing capacity remains resilient under moderate stress scenarios, including a 5% reduction in revenue, 2.4% plant unavailability and a 10% increase in operating costs.