Published on 30 Jan 2019.
RAM Ratings has reaffirmed the AA1(s)/Stable rating of Samalaju Industrial Port Sdn Bhd’s (Samalaju or the Company) Sukuk Murabahah Programme of up to RM950 million (2015/2036) (the Sukuk). The rating is premised on an unconditional and irrevocable corporate guarantee extended by Samalaju’s parent, Bintulu Port Holdings Berhad (BPHB, rated AA1/Stable/P1).
Samalaju Port (the Port) plays an important role as a dedicated port and logistical hub for tenants of Samalaju Industrial Park (the Park), which is part of the broader Sarawak Corridor of Renewable Energy (SCORE). Upon commencement of operations at Phase 1 of Samalaju Port on 6 June 2017, the Port has witnessed a gradual build-up in cargo throughput, with 2.64 million tonnes handled in 2017. In 9M FY Dec 2018, cargo throughput handled jumped 60.1% y-o-y, on an annualised basis, to 3.17 million tonnes. This was supported by growth in raw material imports by the Park’s four main customers – Press Metal Bintulu Sdn Bhd, OM Materials (Sarawak) Sdn Bhd, Sakura Ferroalloys Sdn Bhd and Pertama Ferroalloys Sdn Bhd.
Our stress testing indicates that Samalaju’s funds from operations (FFO) are sufficient to service its annual finance obligations up to FY Dec 2022. However, the Company’s performance remains susceptible to global economic conditions, delays in plant-ups, the downsizing of production and the financial performance of customers. Consequently, Samalaju’s FFO will be insufficient to service principal repayments which begin in 2023, under our stressed case. As such, we have assumed that the Company will incur additional debt to settle these obligations. We expect the Company’s debt-servicing capability to stay weak in the near term, with average projected FFO debt coverage of 0.04 times (base case: 0.07 times). Its gearing ratio is anticipated to peak at 5.54 times over the next five years (base case: 3.14 times).
In view of BPHB’s solid relationship with the Government of Malaysia – given the latter’s shareholdings in BPHB through various government agencies, the Sarawak Government and Petroliam Nasional Berhad – the federal and state governments are seen as having an incentive to provide the Company with financial assistance. This would facilitate the success of the 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.
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Ratings on Samalaju Industrial Port Sdn Bhd