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RAM Ratings affirms AA3/P1 ratings on Bermaz’s Islamic programmes; outlook stable
Published on 14 Jan 2026.
RAM Ratings has affirmed the AA3/Stable and P1 ratings of Bermaz Auto Berhad’s (Bermaz or the Group) Islamic Medium-Term Notes (IMTN) Programme and Islamic Commercial Papers (ICP) Programme (2020/2027). Both issues have a combined limit of RM500 mil.
The affirmation reflects our expectation that Bermaz’s robust financial profile – even in spite of material deterioration in revenue and profitability reported in recent quarters – and cashflow generation will continue to support the Group through a period of softer sales, driven by intensifying competition from Chinese marques and a potential moderation in total industry volume (TIV). The discontinuation of the Kia distributorship is expected to have minimal impact on earnings, given Kia’s small contribution to overall unit sales and the reduced exposure to associate losses. Upcoming Mazda launches like the third-generation CX-5, are anticipated to anchor Bermaz’s revenue outlook over the longer term.
Bermaz recorded a significant decline in FY Apr 2025, with unit sales falling 35% y-o-y to 15,466 units, reflecting heightened competition, weaker sentiment and an ageing model lineup. Revenue and operating profit before depreciation and tax (OPBDIT) correspondingly declined 33.0% and 51.1% to RM2.62 billion and RM186.8 million, respectively. This trend persisted to 1H fiscal 2026, with OPBDIT declining a further 50.7% y-o-y to RM76.5 mil. However, sales are expected to recover in the second half of fiscal 2026, supported by healthy backlog for new launches (Mazda CX-60, CX-80 and Mazda3 1.5L) and price adjustments implemented in September 2025. Margin pressures remain manageable given principal-backed pricing support, while competitive intensity may ease as current EV tax incentives expire after 2025 and new local assembly requirements take effect. Notably, Mazda’s domestic market share improved to sixth position domestically in November 2025 following recent launches and price adjustments. That said, a longer track record will be needed to assess the sustainability of this improvement.
As at end-October 2025, the Group’s total debt eased to RM225.2 mil, translating to a gearing ratio of 0.32 times, down from 0.43 times. Weaker earnings have weighed on annualised funds from operations debt coverage and operating cashflow debt coverages, which fell to 0.30 times and 0.75 times, respectively. Nevertheless, these metrics remain strong for the current rating. Bermaz remains in a net cash position, supported by cash balances of RM380.48 mil (FY Apr 2025: RM433.74 mil). The Group’s solid financial position, strong liquidity and adequate cashflow generation are expected to sustain resilience during disruptive periods over the near term.
Key rating constraints include franchise renewal risk, the increasingly competitive and rapidly evolving business environment, and the Group’s vulnerability to economic cycles and changes in regulatory policy. The upcoming revision to the Open Market Valuation (OMV) policy, which may lift vehicle prices by up to 30%, could materially impact the affordability of Mazda cars if implemented by July 2026.
Analytical contact
Lai Jing Wei
(603) 2708 8239
jingwei@ram.com.my
Thong Mun Wai
(603) 2708 8255
munwai@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
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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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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