MARC Ratings has affirmed its AA-IS rating on MMC Port Holdings’ RM1.0 billion Sukuk Murabahah programme with a stable outlook.
MMC Port is an investment holding company of port operators whose strong competitive advantage in transhipment services in the region and trade gateways domestically as well as long operating track record remain key rating drivers. Potential impact on the performance of its ports from any slowdown in the global trading environment and its dependence on the quantum of dividend income from port subsidiaries are moderating factors to the rating.
MMC Port has five domestic port operators — Pelabuhan Tanjung Pelepas Sdn Bhd (PTP), Northport (Malaysia) Bhd (Northport), Penang Port Sdn Bhd, Johor Port Berhad, and Pelabuhan Tanjung Bruas Sdn Bhd — with a combined handling capacity of 21.5 million twenty-foot equivalent units (TEUs), placing it among the top 15 ports in the world. Operating under long-term concessions, the ports have benefitted from their strategic locations along the Malacca Straits. In the south, PTP is a major transhipment hub for the Asia-North Europe and Asia-North America routes, supported by its strategic partnership with A.P. Moeller- Maersk. In the central region, its Northport in Port Klang manages container, conventional, automotive roll-on/roll-off (ro-ro) handling as well as associated logistics and marine services. In the north, Penang Port is the sole gateway port providing handling capabilities to that region.
For 1H2022, MMC Port recorded lower container volume of 7.9 million TEUs from 8.5 million TEUs a year earlier, mainly due to the disruption in liners’ schedules from China’s strict zero-COVID measures. Conventional services performed better at 17.9 million freight weight tonnage (FWT) (1H2021: 17.5 million FWT), mainly backed by Northport’s higher handling volume in the automotive ro-ro, liquid and bulk segments. Consolidated revenue rose to RM1.9 billion, supported by tariff revisions while cash flow from operations declined to RM677.5 million on higher tax payments (1H2021: RM1.8 billion; RM768.6 million). Operating profit margin stood at 31.9% in 1H2022, supported by cost rationalisation initiatives to maintain margin levels.
For 2023, MMC Port has a planned capex of about RM2.0 billion, of which the bulk will be accounted for by Northport (about RM900 million) and PTP (about RM615 million), and will be funded at the port operators’ levels. Consolidated borrowings stood at RM5.6 billion as at end-June 2022 (1H2021: RM6.0 billion), translating to gross and net debt-to-equity ratios of 1.13x and 0.75x.
At the holding company level, MMC Port recorded revenue of RM61.6 million in 1H2022, solely comprising dividend income from its subsidiaries. Borrowings of RM1.0 billion consists of the sukuk as at end-June 2022; the first sukuk repayment of RM200 million is only due in April 2027, providing sufficient time for the holding company to build its liquidity buffer. Its cash balances stood at RM98.8 million as at end-June 2022. Expected proceeds from the planned listing on Bursa Malaysia in the medium term will strengthen its balance sheet.