MARC Ratings has upgraded its rating on SAJ Capital Sdn Bhd’s Sukuk Murabahah Programme of up to RM650 million to AAIS from AA-IS, with a stable outlook.
SAJ Capital is a wholly-owned funding vehicle of Ranhill Capital Sdn Bhd, which holds an 80% stake in Ranhill SAJ Sdn Bhd, Johor’s sole source-to-tap water services provider. Given its reliance on dividends from Ranhill SAJ to meet its sukuk obligations, SAJ Capital’s rating is driven by Ranhill SAJ’s credit strength.
The rating upgrade reflects Ranhill SAJ’s materially stronger credit profile, underpinned by sustained improvements in operating performance, cash flow generation and financial flexibility. This strengthening has been driven by rising water demand and the tariff adjustments implemented in 2024 and 2025, which have resulted in stronger earnings, liquidity and debt-servicing capacity. MARC Ratings also expects Johor’s expanding economy, ongoing industrialisation and growing data centre investments to sustain long-term growth in water demand and resilient cash flow generation.
Ranhill SAJ’s financial profile has strengthened materially, driven by sustained growth in revenue, earnings and operating cash flow. Based on its 9MFY2026 performance, FY2026 revenue is projected at approximately RM1.9 billion, more than 30% above historical levels, while operating cash flow is expected to rise to around RM800 million. Strong EBITDA margins of 41%–54% over the past five years have supported resilient cash generation, liquidity and debt-servicing capacity.
Ranhill SAJ’s stronger earnings and cash flow generation have enhanced its liquidity, capital position and financial flexibility, supporting sustainable dividend distributions. MARC Ratings expects dividend flows to remain sufficient to support SAJ Capital’s sukuk obligations, with the financial service coverage ratio projected to average around 2.0x over FY2027–FY2030, well above the 1.5x covenant threshold. Outstanding sukuk amounted to RM300 million as at end-June 2026.