Find A Rating 
PRESS RELEASES
RAM Ratings affirms Westports Malaysia’s AAA sukuk ratings
Published on 26 Nov 2024.
RAM Ratings has affirmed Westports Malaysia Sdn Bhd’s (Westports or the Company) issue ratings below:
The ratings are anchored by the Company’s strong operational and financial performance, reflecting its critical role as the operator of Malaysia’s largest container terminal and a key regional transhipment hub (the Port). The Port’s strategic location along the Straits of Malacca – one of the world’s busiest shipping routes – and favourable tariff structure provide a competitive edge.
These credit strengths are moderated by Westports’ customer concentration and exposure to trade flow volatility which are influenced by the volatility of economic and trade cycles, shifting supply chains, inclement weather along trade routes, geopolitical tensions and evolving trade policies. Presently, half of the throughput handled is from four Ocean Alliance shipping liners. While the Port will not be a designated hub under the hub-and-spoke strategy of the impending Gemini Cooperation alliance, Westports anticipates a neutral or mild positive impact from spillover container handling. The Company’s long-standing customer relationships also help alleviate perceived concentration risk to some extent.
Despite the inherent industry and market volatility observed, Westports showed resilience in 2023, seeing the Port’s container throughput increasing a lofty 8.3% y-o-y to 10.88 mil TEUs. On balance, the Company is expected to see muted growth in 2024 owing to port congestion caused by the Red Sea crisis earlier in the year which lowered transhipment volumes.
The Third Supplemental Privatisation Agreement, dated 8 December 2023, between Westports, the Port Klang Authority and the Government of Malaysia, aims to develop Westports 2 by adding eight new container terminals, doubling the Port’s capacity over 30 years. Planned capital expenditure of RM4.8 bil from 2024 to 2028 will be funded by a mix of debt, internal funds and equity. Depending on the pace of spending, the forecasted uptick in debt could pressure Westports’ financial profile and reduce rating headroom, based on our sensitised cash flow projections. The Company will need to maintain a cautious approach to debt management. Nevertheless, the Company has indicated plans for equity fundraising to partially finance Westports 2 after dredging and reclamation works commence. A tariff adjustment could alleviate financial pressures from ramped-up capital spending and a higher debt level. Hence, we anticipate debt coverage and leverage indicators to remain commensurate with an AAA rating in the near term.
Analytical contacts
L Nurisya Abdullah
(603) 3385 2492
nurisya@ram.com.my
Davinder Kaur Gill
(603) 3385 2525
davinder@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my
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 2024 by RAM Rating Services Berhad
