Published on 30 Jun 2022.
RAM Ratings has reaffirmed the AAA(fg)/Stable rating of TRIplc Ventures Sdn Bhd’s (TVSB or the Company) MTN Programme of up to RM240 mil in nominal value (2011/2026). The rating reflects an irrevocable and unconditional financial guarantee provided by Danajamin Nasional Berhad (rated AAA/Stable/P1 by RAM).
TVSB is the concessionaire for the development and maintenance of Zone 1 Phase 2 of the Universiti Teknologi MARA (UiTM) campus in Puncak Alam, Selangor (the Project) under a 23-year tripartite Concession Agreement (CA) between UiTM, TVSB and the Government of Malaysia as represented by the Ministry of Higher Education. Repayments of the MTN will be met by TVSB’s steady stream of cash inflows in the form of monthly Availability Charges (ACs) and Maintenance Charges (MCs) under the concession.
Following the successful completion of the Project on 10 April 2014, TVSB is entitled to receive monthly ACs for 20 years up to April 2034. The Company also receives fixed MCs over the same period in return for maintaining the campus. While the CA allows the government to review the scope and rates of MCs every five years, MCs were not changed after the initial five-year period that ended on 10 April 2019.
TVSB’s maintenance track record has been commendable to date. The Company maintained its Key Performance Indicators (KPIs) well above the required level of 93%. TVSB’s KPI for FY Dec 2021 was 99.93% (FY Dec 2020: 99.88%). Failure to meet KPIs will lead to the imposition of demerit penalties and MC deductions. Net performance-related deductions in 2021 were minimal.
Going forward, TVSB’s debt servicing ability is expected to remain strong. The Company’s stressed minimum and average debt service coverage ratios (DSCRs, with cash, calculated over a 12-month period on profit/principal payment months) is expected to come in at 1.50 times and 1.70 times, respectively, under RAM’s sensitised analysis. We continue to assume payment delays and MC deductions. The Company is anticipated to generate an average annual pre-financing cashflow of RM32 mil after meeting maintenance expenses and administrative costs. Our stressed analysis includes an average annual distribution of RM23.4 mil in the form of dividends and Junior Notes repayments to TVSB’s sister company, Pujian Bayu Sdn Bhd, to enable the latter to repay its own MTNs (2019/2034). Without the distribution, TVSB’s DSCRs would be much higher.
The timeliness of concession payments is key as any delay may adversely affect TVSB’s debt servicing ability and liquidity. To date, the Company has received payments from UiTM within RAM’s stressed assumption of three months.
In the unlikely event of a termination of the concession, the disruption of concession payments may jeopardise TVSB’s ability to meet its obligations. Termination risk is deemed to be remote given non-complex maintenance services and the Company’s commendable track record. As a single-purpose company that derives its income from a specific project, TVSB is exposed to project concentration risk. The Company maintains a comprehensive array of insurance policies but these may not fully compensate it for financial losses from a force majeur on a timely basis.
Lee Jo Yee
(603) 3385 2583
Davinder Kaur Gill
(603) 3385 2525
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Published by RAM Rating Services Berhad
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Ratings on TRIplc Ventures Sdn Bhd