KUALA LUMPUR: MARC Ratings has affirmed its AAAIS/MARC-1IS ratings on Gas Malaysia Distribution Sdn Bhd’s (GMD) Islamic Medium-Term Notes and Islamic Commercial Papers programmes with a combined limit of up to RM1bil.
The rating outlook is stable.
MARC Ratings said the ratings reflect GMD’s strong market position as the sole owner and operator of the Natural Gas Distribution System in Peninsular Malaysia, which supports stable and predictable cash flows.
It said the Incentive-Based Regulation (IBR) framework also provides revenue visibility through the recovery of approved annual revenue requirements via formula-based tariff adjustments.
As at end-June 2026, RM530mil and RM210mil were outstanding under the IMTN and ICP programmes, respectively.
In 2025, GMD incurred an under-recovery of RM155.1mil as tolling fee income of RM395.3mil fell short of its approved annual revenue requirement of RM550.4mil.
MARC Ratings said the IBR framework mitigated the shortfall by allowing GMD to recover 75%, or RM116.3mil, through tariff adjustments.
Despite its lower tolling fee income, GMD’s revenue rose to RM513.1mil in 2025 from RM490.9mil in 2024, driven by higher IBR-related revenue adjustments of RM116.3mil.
Its operating margin improved to 51.4% from 48.6%.
GMD expects tolling fee income to remain below the approved annual revenue requirement in 2026 due to weaker firm capacity reservations, particularly from rubber industry customers amid uncertain global trade conditions.
However, MARC Ratings said any under-recovery is expected to be recouped through distribution tariff surcharges during Regulatory Period 3 (RP3).
For RP3 covering 2026 to 2028, GMD plans about RM800mil in regulated capital expenditure, with 80% to 90% expected to be allocated to Natural Gas Distribution System projects.
The plans include expanding its pipeline network by 350km to 400km and undertaking pipeline looping works to improve connectivity and system resilience.
GMD’s debt-to-equity ratio stood at 0.47 times at end-2025 and is projected to rise to about 0.50 times in 2026 as it funds its RP3 capital expenditure.
The company also intends to increase the size of its RM1bil IMTN programme to provide funding flexibility, with utilisation of the expanded programme expected to begin in late 2027 or 2028.
