MNTC gets highest corporate credit rating

Manila North Tollways Corp. (MNTC), the concessionaire for the North Luzon Expressway, has obtained the highest corporate credit rating of PRS Aaa from by Philippine Rating Services Corp.

Companies rated PRS Aaa have a very strong capacity to meet their obligations relative to other Philippine corporations, PhilRatings said.

In issuing the rating, PhilRatings took into consideration MNTC’s strong cash flow generation, its stable core income, and the relatively resilient demand for the company’s toll services.

MNTC, a member of the Metro Pacific Group, posted a net income of P1.6 billion last year, 20.8 percent higher than the P1.3 billion earned in 2010 mainly due to an 11.8- percent toll adjustment amid inclement weather and recurring hikes in fuel prices.

Despite the increased costs for travelers, full-year traffic only dipped one percent from 159,882 vehicle entries per day in 2010 to 158,342 in 2011.

Notwithstanding the lower traffic volume during the year, full year 2011 revenues still managed to grow to P6.5 billion, up 10.4 percent.

“MNTC’s cash flow from operations remained healthy and posted a significant growth of 14.4 percent to P3.6 billion in 2011. Free cash flow was high at P3.4 billion and is sufficient to cover current debt, as well as interest payments. This trend is expected to continue moving forward, given that MNTC’s business generates a substantial amount of cash on a daily basis,” PhilRatings said.

PhilRatings said it sees demand for MNTC’s services to be relatively resilient as the public continues to use such services despite increased costs. Up until March 2012, gas prices were still rising but such hikes have since eased. The current decline in fuel costs is expected to lessen travel expenses and further boost MNTC’s top line results.

On July 20, 2011, the Bases Conversion Development Authority (BCDA) and MNTC signed a business and operating agreement for the latter to manage, operate and maintain the Subic-Clark-Tarlac Expressway (SCTEX). MNTC is now awaiting the approval of the Office of the President before it can take over the management of SCTEX as BCDA’s private sector partner. After the takeover, MNTC will focus on the integration of NLEX and SCTEX into one seamless network.