MARC Ratings has affirmed its AA-IS rating on Quantum Solar Park (Semenanjung) Sdn Bhd’s (QSP Semenanjung) RM1.0 billion Green Sustainable and Responsible Investment (SRI) Sukuk. The rating outlook is stable. QSP Semenanjung has a 100%-ownership in three project companies — QSP (Kedah) Sdn Bhd, QSP (Melaka) Sdn Bhd and QSP (Terengganu) Sdn Bhd — with each owning a fully operational 50MW solar photovoltaic plant.
The rating affirmation reflects the strength of the project fundamentals underpinned by three 21-year solar power purchase agreements (SPPAs) with Tenaga Nasional Berhad (TNB) (AAA/Stable). Under the SPPAs, the demand risk is largely eliminated as the national power company will purchase the energy generated by the three photovoltaic plants at a fixed tariff. The rating is moderated by the variability in solar irradiance and unexpected events that may affect the plants’ operational performance.
For 2021, energy production from all three plants — in Gurun, Kedah; Jasin, Melaka; and Merchang, Terengganu — exceeded P90 forecasts by an average of 6.4%. Accordingly, QSP Semenanjung registered higher consolidated revenue by 6.2% at RM144.6 million and earnings before interest, tax, depreciation and amortisation (EBITDA) by 7.3% at RM123.7 million compared with projections. Its liquidity position improved to RM150.3 million, which is more than sufficient to meet its profit payment and principal repayment obligations of RM49.2 million in April 2022 and RM48.7 million in October 2022.
Under the P90 base case projections, the projects’ minimum and average finance service coverage ratios (FSCR) stood at 1.99x and 2.38x, providing a comfortable buffer for sukuk repayments during the remaining tenure of the sukuk programme. Our sensitivity analysis demonstrates that the projected cash flow can withstand moderate stress scenarios of P99 energy production, lower plant availability of 97.6% and an increase in operations and maintenance (O&M) cost by 10%.