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RAM Ratings affirms Solarpack Suria Sungai Petani’s AA2 sukuk rating
Published on 04 Dec 2024.
RAM Ratings has affirmed the AA2/Stable rating of Solarpack Suria Sungai Petani Sdn Bhd’s (3SP or the Company) ASEAN Green SRI Sukuk Wakalah of up to RM305 mil (2023/2043).
The rating reflects the sound project economics and operational performance of 3SP’s 90.88 MWac solar photovoltaic plant (the Plant) in Sungai Petani, Kedah, which underpins the Company’s robust cashflow generation, translating to strong projected Sukuk coverages that continue to commensurate with the rating.
3SP’s proactive operation and maintenance strategies combined with better solar irradiance in FY Dec 2023 allowed the Plant to generate a net electrical output (NEO) of 174.8 GWh, well above the power purchase agreement (PPA)’s minimum requirement of 129.2 GWh. In early March 2024, however, a flashover incident affected one of the Plant’s 29 central inverters, leading to a 3.4% decrease in capacity. The affected parts were replaced and the inverter was back online in early October 2024. Despite this, the NEO of 109.2 GWh for 7M 2024 still exceeded our expectations by 10%.
The Company’s debt servicing ability as measured by the annual FSCR (with cash balances, post-distribution) is expected to stay strong, with minimum and average FSCRs projected to be a respective 1.66 times and 1.85 times under RAM’s sensitised analysis. Sensitivities assumed include lower energy generation, higher operating expenses and capital expenditure.
Over the period in review, 3SP’s sound operating performance translated into healthy revenue and operating profit before depreciation, interest and tax of RM22.3 mil and RM18.9 mil, respectively, in 6M FY Dec 2024 (FY Dec 2023: RM40.6 mil and RM35.1 mil). Largely thanks to strong topline growth, the Company registered a pre-tax profit of RM4.0 mil in 6M FY Dec 2024 (FY Dec 2023: RM2.9 mil). In line with the sukuk terms, RM20 mil was distributed to 3SP’s shareholders in June 2024 without affecting its projected debt coverage. On the liquidity front, a cash pile of RM28.6 mil as at end-September 2024 along with projected pre-financing cashflow of about RM38 mil and the bank guarantee of RM12.5 mil will amply cover the Company’s principal and profit payments for the next 12 months.
Like other solar plants, 3SP’s plant is exposed to solar irradiance variability and performance risks. While its energy output exceeded our expectations in the 29 months since the Plant’s commercial operations date, diligent operations and maintenance are still key to ensuring satisfactory long-term performance.
Awarded under Malaysia’s Large Scale Solar 3 Scheme, the Plant achieved commercial operations on 8 March 2022. 3SP operates under a 21-year PPA with offtaker Tenaga Nasional Berhad (rated AAA/Stable).
Analytical contacts
Jason Neo
(603) 3385 2582
jasonneo@ram.com.my
Chong Van Nee, CFA
(603) 3385 2482
vannee@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, in as much 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.
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Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
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