RAM Ratings reaffirms AA3(s)/P1(s) ratings of debt programmes issued by PROTON’s SPV

Published on 21 Nov 2022.

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RAM Ratings has reaffirmed the respective AA3(s)/Stable and P1(s) ratings of the RM4.0 bil Islamic Medium Term Notes Programme (2021/2051) and RM1.0 bil Islamic Commercial Papers Programme (2021/2028) (combined limit of RM4.0 bil) issued by PONSB Capital Berhad, a special purpose vehicle (SPV) of Perusahaan Otomobil Nasional Sdn Bhd (PROTON or the Company). 

The enhanced ratings reflect the credit strength of PROTON as the purchase undertaking obligor for the programmes. PROTON is wholly owned by Proton Holdings Berhad (Proton Holdings or the Group). The credit profiles of the two entities are equated due to their highly interconnected operations and financials. The ratings also benefit from an uplift arising from Proton Holdings’ close relationship with Zhejiang Geely Holding Group Company Ltd (ZGH), which owns 49.9% of the Group. Despite the marginally higher stake of 50.1% held by DRB-HICOM Berhad, we view ZGH as the shareholder with the greater influence over Proton Holdings.

The ratings reaffirmation is premised on Proton Holdings’ performance in FY Dec 2021 coming in within our expectations, the Group’s stronger y-o-y showing for 9M FY Dec 2022, and anticipated improvements in its operational and financial profiles over the medium term. We believe the Group remains on a growth path to solidify its market position over the next three years, which will allow for steady improvement in earnings and financial metrics.

Proton was among the few major marques to post unit sales growth last year, seeing its market share inching up to 21.9% from 20.5% the year before. This share slipped to about 20% for 9M 2022 amid widespread supply issues but kept the brand firmly in second position ahead of Toyota’s 14% and behind Perodua’s 38%. Despite extensive supply crunches, PROTON managed to deliver 115,366 units for year-to-date October 2022, eclipsing total sales last year. Accordingly, Proton Holdings registered a strong performance, with 9M FY Dec 2022 top line of RM6.76 bil and pre-tax profit of RM93.44 mil (FY Dec 2021: RM6.93 bil and RM11.32 mil, respectively). 

We expect Proton Holdings to continue to do well for the rest of the year, given strong outstanding bookings. Over the medium term, the Group is seen to steadily expand sales and market share, aided by new additions to its line-up and growth in exports. Ongoing support from both shareholders in their respective capacities however, is vital. Crucial to the plan are new car models including hybrids and electric vehicles, sourced from ZGH, which possess modern technology, design and emission standards. DRB-HICOM supports Proton Holdings in navigating the local regulatory landscape and supplying parts. The Group also enjoys the financial backing of its parents.

Hefty investment requirements in recent years increased Proton Holdings’ adjusted debt position (including certain hybrid securities) to RM5.54 bil as at end-September 2022 (end-December 2020: RM4.76 bil). In view of its latest investment plans running up to FY Dec 2024, debts will peak at above RM6 bil next year. The Group’s leverage, represented by debts over operating profit before depreciation, interest and tax, are expected to improve from above 9 times this year to a moderate 6.2 times in fiscal 2024 (fiscal 2021: 11.2 times). Funds from operations debt coverage is projected to rise to 0.18 times (FY Dec 2021: 0.12 times).

Besides sizeable investment needs, Proton Holdings’ credit profile is moderated by the automotive sector’s increasing maturity and competitive pressure. The sector is highly cyclical and changes in policies directly affect industry players and consumer buying patterns. This is particularly pertinent as stricter environmental standards coupled with advancements in vehicle and battery technology allowing electrification to gain momentum will fundamentally alter the operating landscape. PROTON intends to develop homegrown electrified models in line with Malaysia’s low carbon aspirations under the 12th Malaysia Plan and National Energy Policy 2022-2040.


Analytical contacts
Ben Inn
(603) 3385 2510

Thong Mun Wai
(603) 3385 2522


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
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Ratings on Proton SPV Berhad