RAM Ratings affirms Johor Corporation’s AAA ratings

Published on 09 Jul 2024.

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RAM Ratings has affirmed the AAA/Stable/P1 corporate credit ratings of Johor Corporation (JCorp or the Group). The AAA/Stable ratings of the Group’s RM3.5 bil Islamic Medium-Term Notes Programme and RM2 bil State-Guaranteed Programme have concurrently been affirmed. The RM2 bil programme is secured by an irrevocable and unconditional guarantee from the Johor state government.

As the state economic development corporation, JCorp plays a strategic role in spearheading industrial development in Johor. Government support has been clearly demonstrated in the past through guarantees and letters of undertaking for JCorp’s borrowings, among other means. JCorp is one of the very few state agencies in Malaysia to benefit from government-guaranteed borrowings, enabling it to contribute to the state’s economic growth and diversification.

The ratings also consider the dominant market positions of the Group’s healthcare operations and food and restaurant segment through its equity stakes in KPJ Healthcare Berhad (36%) and QSR Brands (M) Holdings Berhad (56%), the latter of which is accounted for by using the equity method in JCorp’s consolidated financials. 

After grappling with supply chain challenges, inflationary pressures and the introduction of the minimum wage in 2022 and early 2023, QSR was set back further by shifts in consumer sentiment related to the geopolitical tensions in the Middle East which began in 4Q 2023. This resulted in a pre-tax loss of RM66 mil for QSR in FY Dec 2023. To preserve cash, various measures have been implemented, including temporary store closures and negotiations for rental rebates. While a significant recovery in the near term is unlikely, we view QSR’s liquidity to be sufficient and its long-term business prospects as fundamentally sound. 

JCorp’s standalone credit strength is weighed down by its financial profile. Supported by land sales and dividend income, JCorp’s interest coverage has fluctuated between 1.0 time and 3.2 times in the last five years. The metric fell to 1.7 times in FY Dec 2023 (FY Dec 2022: 3.2 times) due to lower dividend income. However, higher dividends for fiscal 2024, bolstered by anticipated special dividends from Kulim (Malaysia) Berhad following the listing of its plantation business, are expected to improve interest coverage this year. Although details are limited, the proposed Johor-Singapore Special Economic Zone announced in early 2024 is envisaged to stimulate investor demand from investors - providing some upside to land sales in the longer term. Meanwhile, the group-level operating cashflow debt cover in the next 1-2 years is estimated to fall within the historical range of 0.10 times-0.20 times.

As at end-March 2024, company-level gearing inched up to 0.79 times (end-December 2022: 0.63 times) as more debts were drawn down to repay borrowings held under SPV subsidiaries. This forms part of JCorp’s loan consolidation exercise, in line with its objective to optimise funding cost and release assets previously charged as security.


Analytical contacts
Amy Lo
(603) 3385 2509

Thong Mun Wai
(603) 3385 2522

Media contact
Sakinah Arifin 
03 3385 2500


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.

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Ratings on Johor Corporation