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RAM Ratings affirms AEON CO. (M) BHD.’s AA2/Stable/P1 sukuk ratings
Published on 12 Aug 2026.
RAM Ratings has affirmed the AA2/Stable ratings of AEON CO. (M) BHD.’s (AEON (M) or the Company) RM1 bil Islamic Medium-Term Notes (MTN) Programme (2016/2031) and RM2 bil Islamic MTN Programme (2024/-), as well as the P1 rating of its RM2 bil Islamic Commercial Papers Programme (2024/2031).
The affirmation reflects AEON (M)’s established market position and resilient property management service (PMS) earnings. Its extensive retail and mall network supports operating stability amid a competitive retail environment, while its measured mall expansion strategy is expected to strengthen recurring rental income and reinforce its position as the largest domestic mall operator by net lettable area. The Company’s integrated retail-PMS business model continues to underpin consistently high mall occupancy levels, tenant retention and cash flow visibility from its PMS segment, which contributed about 80%-90% of operating profit over the last three years.
The ratings are moderated by intense competition in the retail industry and the Company’s exposure to evolving consumer spending behaviour. Nonetheless, AEON (M)’s earnings stayed broadly stable in FY Dec 2025, as stronger PMS profitability offset a weaker retail performance, which was partly weighed down by greater sales contribution from lower-margin Foodline products and ongoing renovation activities. Retail margins are expected to remain under pressure in the near term amid cautious consumer sentiment, although the opening of a general merchandise store (GMS) last January, together with the scheduled launch of a new mall and its anchor GMS in 2H 2026, should support incremental earnings growth from FY Dec 2027 onwards.
As at end-December 2025, AEON (M)’s lease-adjusted debt-to-operating profit before depreciation, interest and tax (OPBDIT) and funds from operations debt coverage (FFODC) ratios stood at 3.23 times and 0.28 times, respectively, broadly unchanged from prior year levels. Changes in these metrics reflect a reassessment of RAM’s lease liability adjustments, rather than any material deterioration in the Company’s underlying performance.
Leverage is expected to trend higher over the next two years, with borrowings projected to approach RM1 bil by end-December 2026 from RM790 mil at end-March 2026. Under our sensitised scenario, adjusted debt-to-OPBDIT could rise to 3.4 times - 3.6 times, while adjusted FFODC may moderate to 0.25 times - 0.26 times. Despite the anticipated weakening, these levels remain supportive of the current rating.
We believe AEON (M) retains sufficient financial flexibility to execute its growth initiatives, supported by our expectations of a ‘high’ likelihood of extraordinary support from its Japan-based parent, AEON CO., LTD. (AEON CO. or the Group), if required. This assessment reflects the Company’s strategic importance to the Group, demonstrated by its strong brand alignment, management integration and role within AEON CO.’s regional retail and mall operations. That said, no rating uplift benefit was accorded as AEON (M)’s own standalone risk profile already commensurate with the current rating.
Analytical contacts
Hani Hamizah Nor Hashim
(603) 2708 8240
hani@ram.com.my
Nur Hadhirah Binti Bahrom
(603) 2708 8207
hadhirah@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.
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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