Posted Date: September 9, 2021
MARC has affirmed its AA-IS rating on UiTM Solar Power Dua Sdn Bhd’s (UiTM Solar 2) outstanding Green Sustainable and Responsible Investment (SRI) Sukuk of RM100.0 million. The rating outlook is stable.
UiTM Solar 2 owns a 25MWac solar photovoltaic plant in Pasir Gudang, Johor, which was developed under a 21-year power purchase agreement (PPA) with Tenaga Nasional Berhad (TNB) and became operational in December 2020. The affirmed rating continues to mainly reflect the strength of the PPA under which the demand risk is eliminated as the energy generated by the plant will be purchased at a fixed tariff by TNB. As with other solar power plants, moderating factors are the variability in solar irradiance and operational risk that may affect the amount of electricity generated.
In 1H2021, the plant generated an electricity output of 20,334MWh, against the P90 estimate of 20,292MWh. While some volatility in the plant’s energy production due to variabilities in solar irradiance was recorded, no major outages were encountered. Accordingly, UiTM Solar 2 recorded revenue of RM7.7 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of RM6.4 million, representing 50.4% and 51.4% of projected revenue and EBITDA for the year. Achieving the 2H2021 revenue forecast could be challenged by lower-than-expected irradiance if the northeast monsoon season from November onwards is worse than anticipated.
UiTM Solar 2’s cash and bank balances of RM9.9 million as at end-1H2021 is more than sufficient to cover its first sukuk repayment of RM3.0 million in March 2022. Under its base case projections, the minimum and average pre-distribution finance service coverage ratios stand at 1.92x and 3.12x. Sensitivity analysis indicates that the projected cash flow can withstand moderate stress scenarios.