RAM Ratings reaffirms PKNS’s AA3/P1 issue ratings

Published on 25 Jan 2023.

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RAM Ratings has reaffirmed the issue ratings of Perbadanan Kemajuan Negeri Selangor (PKNS or the Agency) as follows:

Issue details


Rating action

RM1.7 bil Islamic Medium-Term Notes Programme (2013/2033)



RM1 bil Islamic Commercial Paper Programme (2021/2028)



RM3 bil Islamic Medium-Term Notes Programme (2021/2121)




The ratings are based on our expectation that the Agency will remain important to the Selangor state government (SSG) and accordingly receive state support, if required. In the last two years, the SSG provided PKNS with soft loans to support its operations during the pandemic (RM200 mil) and to help fund investment needs (RM150 mil for the Agency’s new venture into the power sector).  

In FY Dec 2021, PKNS’s revenue doubled to RM2 bil while pre-tax profit returned to the black at RM109.9 mil, largely owing to the stronger performance of the property development segment and land sales. PKNS’s adjusted funds from operations debt coverage (FFODC) improved to 0.09 times (FY Dec 2020: 0.02 times). In view of its year-to-date showing, the Agency’s operating profit may be relatively subdued for full-year 2022, though its bottom line will be propped up by special dividend from the disposal of its interest in Kesas Sdn Bhd this year, amounting to RM375 mil. 

Excluding non-recourse project debt for the construction of a power plant under Pulau Indah Power Plant Sdn Bhd (PIPP), PKNS’s adjusted debt and gearing climbed to a respective RM2.8 bil and 0.46 times as at end-July 2022 (end-December 2020: RM2.3 bil and 0.36 times). The bulk of the proceeds from the special dividend is earmarked to pare down existing borrowings. The rest is expected to be utilised to support investment outlays in the near term (power plant and hospital construction projects), pending the materialisation of planned asset monetisation. 

Adjusting for PIPP’s project finance debts, we expect relatively small debt increases in the next two years. PKNS’s adjusted gearing and FFODC are anticipated to hover around 0.4 times and 0.05 times, respectively, during the period. However, the ratios may deteriorate if sales of completed inventory are sluggish and/or the delay in the receipt of proceeds from land disposals is prolonged (including ongoing sale transaction of 3,390 acres of land in Bernam Jaya). As at end-December 2022, PKNS has received RM217.3 mil of the proceeds, while payment of the remaining RM961.1 mil will be staggered over the next few years. 


Analytical contacts
Hani Hamizah Nor Hashim
(603) 3385 2575

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
© Copyright 2023 by RAM Rating Services Berhad

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