MARC Ratings has affirmed its AA-IS rating on Orkim Berhad’s Islamic Medium-Term Notes (IMTN) Programme of up to RM1.0 billion and revised the outlook to positive from stable. The outlook revision is premised on the company’s proposed initial public offering (IPO), which will result in Permodalan Nasional Berhad (PNB) and Unit Trust Funds under its management (collectively PNB Group) holding a majority stake in the company, hence the expected parental support. As of end-August 2025, the outstanding amount under the programme stood at RM300.0 million.
Orkim’s leading position in domestic clean petroleum product (CPP) transportation and ownership of the largest local CPP tanker fleet are key rating drivers. The rating also reflects strong earnings visibility from charters with reputable oil majors and high entry barriers. Nonetheless, this is tempered by high borrowings due to ongoing vessel acquisitions and contract renewal risk.
The outlook revision reflects a potential rating upgrade within six to 12 months, driven by expected support from PNB Group — a government-linked investment company — projected to hold a majority stake in Orkim after the proposed IPO by end-2025. Prior to the IPO, the current sole shareholder, Ekuinas Capital Sdn Bhd (through its indirect wholly-owned subsidiary Tetap Kuasa Sdn Bhd), will sell 66.7% of its shareholding in Orkim to PNB Group, followed by an offer for sale of its remaining 33.3% stake. A new 100 million share issuance will reduce PNB Group’s stake to 60%, assuming no over-allotment. The rating agency considers PNB Group a strong shareholder with a proven record of supporting its subsidiaries. This transition aligns with the government’s Government-linked Enterprises Activation and Reform Programme (GEAR-uP), under which PNB will develop IPO-ready Bumiputera companies into regional champions while preserving Bumiputera institutional ownership.
Orkim owns the largest domestic CPP fleet, comprising 15 operational CPP tankers and two liquefied petroleum gas tankers, out of approximately 27 Malaysian-registered CPP and chemical tankers in domestic service. As of end-August 2025, its time charter contracts had an outstanding value of RM633.9 million (including extension periods), providing earnings visibility through 2032.
As part of its fleet expansion and rejuvenation strategy, Orkim plans to acquire five tankers between 2025 and 2027 — comprising one second-hand medium-range (MR) chemical tanker (acquired in October 2025) and four CPP/chemical tankers, two of which are currently under construction. The MR chemical tanker and the two newbuilds have already secured charter contracts with oil majors. The acquisitions will be funded through borrowings, IPO proceeds, and internal funds, with total debt expected to peak at approximately RM650.0 million in 2027, raising the debt-to-equity ratio to 0.9x before declining. All acquisitions will be contract-driven and executed only upon firm charter commitments.
Revenue in 1H2025 declined slightly by 4.4% y-o-y to RM152.3 million (unaudited), mainly due to the sale of its CPP tanker, Orkim Merit, in May 2024. The MR chemical tanker, which will commence operations in mid-October 2025, is expected to partially offset this impact in the full-year results for 2025. From 2026 onwards, revenue is expected to grow, supported by the MR tanker’s full-year contribution and the commissioning of the two newbuilds in 1H2027.