MARC has affirmed its AA-IS rating on port operator Pelabuhan Tanjung Pelepas Sdn Bhd’s (PTP) Islamic Medium-Term Notes (Sukuk Murabahah Programme). The rating outlook is stable. The rating has considered the increase in PTP’s programme limit to RM2.15 billion from RM1.9 billion.
The affirmed rating is mainly driven by PTP’s strong position as a key regional transhipment container port which has enabled it to generate healthy cash flow that has remained supportive of its financial metrics. The rating also incorporates support from key shareholders MMC Port Holdings Sdn Bhd (70%), and Netherland-based APM Terminals B.V. (30%) which have established track records and expertise in port operations that have benefited PTP. These strengths have enabled PTP to weather the often-challenging container shipping environment, characterised by intense competition from regional port operators.
PTP’s financial performance held steady in 2020, partly due to its strong pre-pandemic performance in 1Q2020, and partly to a strong rebound in container handling volume in the third and fourth quarters. For 2020, container handling volume grew 8.48% y-o-y to 9.85 million twenty-foot equivalent units (TEU), benefitting from the higher-than-expected recovery in the Asia-Europe route and from the diversion of additional volume from neighbouring ports. Its largest customer Mærsk and partner Mediterranean Shipping Company (MSC) in the 2M Alliance accounted for about 87% of its TEU handling volume. The significant concentration risk is substantially mitigated by Mærsk’s interest in PTP and the port’s position as the liner’s largest transhipment hub.
For 9M2020, PTP registered higher y-o-y revenue and operating profit of RM1.05 billion and RM332.6 million. Its operating profit margin improved to 31.8% at end-9M2020 (FY2019: 28.6%), benefiting from ongoing cost efficiency measures. At end-2020, borrowings declined to RM2.53 billion (end-2019: RM2.64 billion) and are expected to reduce by RM155 million by end-2021 through repayments of two term-loan facilities. It has a capex of RM2.3 billion in the medium term which will be largely funded internally. Gross and net adjusted debt-to-equity ratios stood at 1.02x and 0.72x at end-9M2020.