MARC Ratings has affirmed its ratings of AA-IS and MARC-1IS on SIBS Sdn Bhd’s Islamic Medium-Term Notes (IMTN) Programme of up to RM3.0 billion and Islamic Commercial Papers (ICP) Programme of up to RM500.0 million, with a combined aggregate limit of up to RM3.0 billion. The long-term rating outlook is stable.
The affirmed ratings reflect SIBS’ strengths in end-to-end modular housing manufacturing, growing order book, and increasing geographic diversification, tempered by execution and regulatory risks in new markets, customer concentration, and balance sheet pressure from expansion.
SIBS, a subsidiary of the Sweden-based SIBS AB Group, operates two highly automated, vertically integrated manufacturing plants in Simpang Ampat, Penang, with a combined annual capacity of 12,000 modules (approximately 6,000 apartment units). Its end-to-end model — spanning design, fabrication, logistics, and installation — is enabled by proprietary software and its in-house mounting system, SIBS Connect, delivering faster turnaround and tighter cost control. Parent company SIBS AB provides strategic support in design and engineering, marketing, and international business development beyond Asia-Pacific.
SIBS commenced production in 2018 serving the Swedish housing market, where modular homes account for approximately 80% of national housing, and expanded to the Kingdom of Saudi Arabia (KSA) in 2023 to supply to NEOM Company (wholly owned by KSA’s sovereign wealth fund, Public Investment Fund). Following completion of Phase 1 and finalisation of Phase 2, a corporate restructuring at NEOM Company since early 2025 deferred anchor developments, including SIBS’ Phase 3 production scheduled for 2025, reducing plant utilisation to around 30% in 1H2025. SIBS maintains its presence in existing markets while pursuing geographic diversification, expanding into Australia, the UK, Greenland, Singapore, and Malaysia, securing approximately RM1.2 billion in new orders with about RM5.7 billion in the pipeline. Utilisation is expected to ramp up to full capacity by end-1Q2026.
Revenue rose three-fold in 2024 to RM2.4 billion (2023: RM796 million), driven by deliveries to the NEOM projects in KSA. Margins narrowed due to start-up and compliance costs for new market entry. In 1H2025, the deferment of subsequent NEOM phases led to a sharp decline in revenue and pre-tax profit to RM242.6 million and RM26.2 million (1H2024: RM1.5 billion; RM388.6 million). Despite this, operating margin held at 18.5% on production efficiencies. Looking ahead, growth is expected to be driven by new contracts from diversified regions.
As at end-1H2025, borrowings increased to RM800.7 million (2024: RM573 million), driven by working capital needs for projects in Sweden and upfront mobilisation costs for expansion into new markets, including Australia, the UK, Greenland, Southeast Asia and other markets targeted for entry over the medium term. These costs mainly relate to advance material procurement, design work for tenders, and legal, consultancy, compliance, and certification activities. During the same period, SIBS’ equity base increased to RM628.0 million from RM501.9 million following an equity injection of RM99.9 million, partially offsetting the rise in the gross debt-to-equity ratio to 1.27x (2024: 1.14x). Capitalisation was further strengthened by an additional equity injection of RM9.1 million in 2H2025, with continued shareholder support expected, if required.
Liquidity remains manageable, with near-term obligations mainly comprising secured short-term trade facilities. An upcoming RM125 million sukuk matures in March 2026 and is expected to be repaid through a mix of internal cash and refinancing. Looking ahead, projected operating cash flow recovery and planned equity injections would support the liquidity position.