RAM Ratings reaffirms rating of Samalaju’s sukuk
KUALA LUMPUR: RAM Ratings has reaffirmed the AA1(s)/Stable rating of Samalaju Industrial Port Sdn Bhd’s (Samalaju Port) Sukuk Murabahah programme of up to RM950 million (2015/2036), premised on an unconditional and irrevocable corporate guarantee extended by Bintulu Port Holdings Bhd (BPHB), the parent of Samalaju.
“Samalaju Port plays an important role as a dedicated port and logistical hub for tenants of Samalaju Industrial Park (SIP), which is part of the broader Sarawak Corridor of Renewable Energy (SCORE).
“Upon commencement of operations at Phase 1 of Samalaju Port on June 6, 2017, the port had seen a gradual build-up in cargo throughput, with 1.67 million tonnes handled in the first nine months of 2017, compared to 0.45 million tonnes during the port’s interim phase in 2016.
“Demand at the port is currently driven by four customers – due to slower-than-expected take-up at the Park, the port’s full-year utilisation rate is forecasted to come up to only 12 per cent in 2017 (based on maximum handling capacity of 18 million tonnes), lower than our previous expectations,” the ratings agency said in a press statement.
It pointed out that Samalaju’s performance remains susceptible to global economic conditions, delays in plant-ups, the downsizing of production and the financial performance of customers.
“As such, we expect the compa- ny’s debt-servicing capability to stay weak in the near term, with average projected funds from operations (FFODC) of 0.05 times (base case: 0.10 times). Its gearing ratio is projected to peak at 3.77 times over the next five years (base case: 2.08 times),” it said.
Meanwhile, it noted that the construction of Samalaju Port was completed on time and within budget.
“Despite some delay in completion of the capital dredging works, it does not disrupt operations of the Port and the works had been concluded on December 31, 2017. Samalaju is estimated to incur cumulative project costs of RM1.76 billion for Phase 1, which is within the budget of RM1.9 billion,” it added.
Aside from that, it highlighted that in view of BPHB’s solid relationship with the government – given the latter’s shareholdings in BPHB through various government agencies, the Sarawak Government and Petroliam Nasional Bhd – the federal and state governments are seen as having an incentive to provide the company with financial assistance.
“This would facilitate the success of SCORE while ensuring Samalaju meets its financial and operational obligations. We believe the company will continue to derive financial flexibility from BPHB and both the federal and state governments,” it concluded.