RAM Ratings reaffirms Westports Malaysia’s AAA sukuk rating

Published on 03 Jan 2023.

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RAM Ratings has reaffirmed the AAA/Stable rating of Westports Malaysia Sdn Bhd’s (Westports or the Company) RM2.0 bil Sukuk Musharakah Programme (2011/2031). 

The rating reflects the Company’s critical function as the operator of Malaysia’s largest container handling terminal and a key transhipment hub in the region (the Port) as well as its resilient financials. Westports’ competitive position is anchored by its strategic location along the Straits of Malacca – one of the world’s busiest shipping routes – combined with its strong operational capabilities and well-established relationship with international shipping liners. The Company’s concession under its Privatisation Agreement (PA) with the Port Klang Authority and the Government of Malaysia runs up to 2054.

Westports’ container throughput volume is largely resilient, though having felt the impact of supply chain disruptions during the pandemic, China’s continued lockdowns, and the recent deceleration of consumer demand and international trade. This is seen in the drop in its transhipment volume for 9M 2022 (-12.7% y-o-y). The increasing proportion of gateway cargo moderated the weakness in the transhipment segment, resulting in an overall throughput reduction of 5.9% y-o-y. We believe throughput volume growth over the next two years will likely be challenging, depending on macroeconomic conditions given the possibility of a global recession. 

The Company’s financial metrics remained steady, supported by a favourable tariff structure and prudent cost management, with superior debt coverage indicators. Westports continues to explore growth opportunities, particularly via Westports 2.0 – an expansion of the Port which will entail the development of eight new container terminals. This will double the Port’s container handling capacity at a total cost of RM12.6 bil over the next three decades. The Company is in the process of finalising negotiations on the PA and commercial terms for Westports 2.0 with the government and relevant authorities. Discussions are expected to conclude by June 2023. 

Given sizeable capital expenditure of up to RM4.8 bil between 2022 and 2027, to be funded by a mix of debt, internally generated funds and equity, Westports’ financial profile could moderate marginally over the next five years as financial leverage increases and reduces rating headroom. Accordingly, the Company will have to exercise prudence in the management of its balance sheet. In the near term, however, we anticipate its debt coverage and leverage indicators to remain commensurate with an AAA rating. 

Like other ports, Westports faces high customer concentration risk and tariff pressure, with four shipping liners under the Ocean Alliance handling about half the Port’s total throughput. However, these are long-standing customers with continuous sizable volume contributions, mitigating somewhat the apparent concentration risk.


Analytical contacts
L Nurisya Abdullah
(603) 3385 2492

Davinder Kaur Gill
(603) 3385 2525


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2023 by RAM Rating Services Berhad

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