MARC Ratings has upgraded Evyap Sabun Malaysia Sdn Bhds (Evyap Malaysia) RM500.0 million Sukuk Wakalah Programme rating to AAIS from AA-IS and accordingly revised the rating outlook to stable from positive.

Evyap Malaysia"s healthy operational and financial performance, and sustained strong credit metrics since the initial rating was assigned in 2020 are key rating drivers for the upgrade. The group has also adhered to prudent financial management in expanding its oleochemical plant capacity - from 260,000MT p.a. for fatty acids in 2018 to 380,000MT p.a. currently and the addition of an ester production facility with a current capacity of 19,800MT p.a. - and on dividend distribution, a policy which MARC Ratings expects Evyap Malaysia to maintain in the foreseeable future.

Based in Tanjung Langsat, Johor, Evyap Malaysia is one of the largest vertically integrated oleochemical producers of multi-chained fatty acids (primary product), soap noodles, glycerines, esters,and bar soaps. MARC Ratings views positively Evyap Malaysia's ability to adapt its oleochemical output in accordance with demand from its well-established customer base in over 100 countries. It draws support from its parent, Turkiye-based Evyap Group, which has strong expertise and a track record of over 90 years in the manufacture and distribution of personal care products in Europe and the Middle East region.

The rating agency notes that Evyap Malaysia has generally maintained high utilisation rates; for 1H2024, this stood at 94.5% for fatty acids production. It has steady supply of feedstock - palm oil, palm stearin and palm kernel oil - that is secured from the palm oil refinery cluster in Pasir Gudang, proximate to the plant. Its facilities have the Roundtable on Sustainable Palm Oil (RSPO) Supply Chain Certification Standards status which allows for greater marketability. The group is in the process of setting up a second oleochemical plant in the region. Costing RM440 million, the plant,i