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RAM Ratings affirms SMJ Energy’s AAA sukuk rating
Published on 16 Dec 2025.
RAM Ratings has affirmed SMJ Energy Sdn Bhd’s (SMJE or the Group) AAA/Stable rating of its Multi-Currency Islamic Medium Term Notes (Sukuk Wakalah) Programme of up to RM10.0 billion. The rating considers SMJE’s highly strategic mandate and integral relationship with the state government and the Group’s strong cashflow generation. SMJE’s rating is equated to Sabah’s ‘robust’ State Implicit Strength, reflecting our view of the ‘almost certain’ extraordinary financial support to be extended from the state government, if required.
Established as Sabah’s state-owned oil and gas company under the Commercial Collaboration Agreement between the Sabah state government and PETRONAS, SMJE is mandated to oversee the development of the state’s oil and gas resources, enhance revenue share for the state, and support Sabah’s energy security objectives, closely aligning it to the Sabah Energy Roadmap and Master Plan 2040. Its responsibilities include formulating policies for indigenous energy resources and developing an integrated gas master plan. SMJE's growing involvement in the Sabah oil and gas sector is also expected to help attract foreign direct investments, promote industrial development and increase local participation in the oil and gas services & equipment sector.
In FY Dec 2024, SMJE’s revenue rose 11.7% y-o-y to RM972.4 mil supported by full year contributions from its investments despite lower crude oil prices. Operating profit before depreciation, interest and tax (OPBDIT) leapt 72.4% y-o-y to RM370.4 mil due to lower operating costs over the same period. However, as lower prices subsist, revenue and profit for FY Dec 2025 are expected to be lower. SMJE’s gearing ratio strengthened to 0.83 times as at end-December 2024, compared to 1.17 times a year earlier, reflecting profit accretion and repayment of short-term loans. Stronger cashflows and lower debts also led to an improvement in the Group’s operating cashflow (OCF) debt cover from 0.45 times to 0.53 times. The Group issued RM400 mil this year to fund acquisition costs and its share of capital expenditure for the Samarang Production Sharing Contract (PSC), which is expected to increase gearing to a still manageable 1 time.
SMJE recently entered into a definitive agreement with Petronas LNG Sdn Bhd to acquire 25 per cent equity in Petronas PFLNG 3 Sdn Bhd (ZLNG), currently under construction with operations expected to commence by end of 2027 or early 2028. To further strengthen SMJE’s upstream presence in Sabah waters, SMJE also signed a heads of agreement with PETRONAS Carigali Sdn Bhd for the acquisition of 20% non-operating participating interest in the North Sabah Enhanced Oil Recovery PSC, which is expected to be completed by early 2026. As SMJE is still in discussions with PETRONAS to finalise these acquisitions, the impact on the Group’s financial profile will depend on how the acquisitions are structured and the cashflow strength from those investments.
Analytical contacts
Thong Mun Wai
(603) 2708 8255
munwai@ram.com.my
Lee Yee Von
(603) 2708 8217
yeevon@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my
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.
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Published by RAM Rating Services Berhad
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