SD Guthrie's RM2.1bil sukuk refinancing to lift FY26 earnings by RM42mil

KUALA LUMPUR: SD Guthrie Bhd’s move to refinance its perpetual sukuk with a lower-cost sustainability-linked sukuk (SLS) could boost its financial year 2026 (FY26) net profit by 2.3 per cent, or RM42 million, according to CIMB Securities.

The firm said the RM2.1 billion sukuk, priced between 3.8 and 3.97 per cent, will replace its existing RM2.2 billion perpetual sukuk carrying a higher interest rate of 5.65 per cent.

The refinancing is expected to result in annual interest savings of about RM42 million, which will flow directly to its bottom line.

“As at Dec 31, 2024, SD Guthrie’s total borrowings stood at RM5.1 billion, excluding perpetual sukuk, with nine per cent fixed and the rest floating.

“A 0.5 per cent change in rates would affect financial year 2024 net profit by RM17.6 million, implying upside should global and Malaysian interest rates decline,” CIMB Securities said in a note today.

The firm maintained its “Buy” call on SD Guthrie, with a target price of RM6.01 per share.

SD Guthrie’s SLS was fully subscribed following a strong book-building exercise on Oct 27, which saw peak demand reaching twice the initial RM1.5 billion target. The deal was upsized to RM2.1 billion to accommodate the overwhelming investor interest.

The issuance comprises a RM700 million 10-year tranche priced at 3.8 per cent and a RM1.4 billion 15-year tranche priced at 3.97 per cent.

It also forms part of the group’s RM5 billion Islamic notes programme lodged with the Securities Commission Malaysia on Sept 19.

CIMB Securities said the move demonstrates prudent capital management and aligns with SD Guthrie’s sustainability ambitions.

The SLS incorporates targets such as reducing Scope 1 and 2 greenhouse gas emissions by 30 per cent across its global upstream operations and maintaining 100 per cent Roundtable on Sustainable Palm Oil certification.

The sukuk also marks the country’s largest sustainability-linked issuance to date and the biggest in Malaysia’s plantation industry.

© New Straits Times Press (M) Bhd

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