RAM Ratings has affirmed the AAA(fg)/Stable rating of Hanwha Q CELLS Malaysia Sdn Bhd's (HQC or the Company) RM150 mil Guaranteed Medium-Term Notes (2021/2024) (MTN). 

The rating reflects an irrevocable and unconditional guarantee on the MTN from Credit Guarantee Investment Facility (rated AAA/P1 by RAM). HQC is a manufacturer of solar photovoltaic (PV) cells and modules in Malaysia. It is indirectly wholly owned by Hanwha Q CELLS Co. Ltd (Hanwha Q CELLS), the solar arm of Hanwha Solutions Corporation (the Group)  a leading petrochemical player in South Korea, with operations globally.

Excluding the guarantee, HQC's credit profile reflects its very close relationship with Hanwha Solutions which supports our view that financial assistance will be extended if needed, in times of distress. The Company is one of Hanwha Solutions' four manufacturing and research and development (R&D) arms globally, accounting for 23% of the Group's total solar PV cell production capacity. The bulk of HQC's products are sold internally at predetermined quantities and prices that are marked up at a given rate to production cost. The Company benefits from the Group's solid market position and the financial back-up through corporate guarantees and advances. 

Hanwha Q CELLS remains a leading player in selected advanced countries like the US despite its position among global PV module manufacturers slipping in recent years. The Group must continuously invest in R&D efforts to keep up with technological innovations in a competitive and oversupplied market. The sector's prospects are to a great extent also affected by government renewable energy targets and policy support.

HQC's top line was boosted by 49% to RM3.2 bil in FY Dec 2022 (FY Dec 2021: RM2.2 bil) following an upward revision of product prices. The Company turned around to a pre-tax profit of RM186.2 mil (FY Dec 2021: pre-tax loss of RM219.0 mil) on account of wider operating margins, the absence of impairments and realis