Sinar Kamiri owns and operates a 49.0MWac solar photovoltaic plant (SPP), which has been operational since November 27, 2018. The affirmed rating reflects Sinar Kamiri’s steady project fundamentals that are underpinned by a 21-year power purchase agreement with Tenaga Nasional Berhad (TNB) to purchase energy generated by the plant up to certain limit at a fixed price. The PPA substantially mitigates offtaker risk. The rating is moderated by the risk of variability in solar irradiance which determines the amount of energy generated, and performance risks associated with plant operations.

The plant continued to meet its operational metrics as the actual electricity generated of 85,818 MWh was 3.4% higher than the P90 estimates in 2019. Accordingly, Sinar Kamiri posted higher revenue of RM36.4 million against a projected RM33.9 million. Cash flow from operations (CFO), however, was lower at RM10.8 million largely due to a payment obligation related to the plant construction. The company had expected to receive GST refunds of RM10.25 million in 2019. However, this is now expected in 2H2020. As at end-April 2020, total cash balances stood at RM39.7 million, which is sufficient to meet the combined principal and profit payments of RM6.8 million and RM16.9 million due at end-July 2020 and end-January 2021.

Under MARC’s sensitivity analysis on the cash flow projections, the minimum and average financial service coverage ratio with cash stood at 2.11x and 2.39x throughout the sukuk tenure. The sensitised case assumes no GST refunds, higher plant unavailability and an increase in operational cost. The stable outlook reflects MARC’s expectation that Sinar Kamiri will continue to maintain the plant’s operational performance and generate stable income streams that remain supportive of project fundamentals. As electricity production is classified as an essential service, the plant’s operation was not affected by the imposition of the movement control order following the COVID-19 outbreak.

Contacts:

Lee Chi Han, +603-2717 2939 / chihan@marc.com.my;
Lim Wooi Loon, +603-2717 2943 / wooiloon@marc.com.my;
Sharidan Salleh, +603-2717 2954 / sharidan@marc.com.my.