MARC Ratings has affirmed its AA-IS rating on Quantum Solar Park (Semenanjung) Sdn Bhd’s (QSP Semenanjung) outstanding RM665.0 million Green Sustainable and Responsible Investment (SRI) Sukuk with a stable outlook. QSP Semenanjung owns three 50MW power plants located in Gurun, Kedah; Jasin, Melaka; and Merchang, Terengganu.
The rating is underpinned by QSP Semenanjung’s diversified portfolio of solar power assets and long-term power purchase agreements (PPAs) with Tenaga Nasional Berhad (TNB, AAA/Stable). The 21-year PPAs (expiring in 2039 for the Gurun plant and 2040 for the Jasin and Merchang plants) offer long-term cash flow certainty. Under the agreements, TNB will purchase a defined amount of energy from QSP Semenanjung’s three solar photovoltaic (PV) plants at a fixed tariff, insulating the projects from electricity demand and pricing risks. The rating is moderated by the risks pertaining to a variation in solar irradiance and potential operational disruptions from unforeseen severe events or outages.
QSP Semenanjung’s overall energy output in 2024 was about 1.28% lower than the P90 forecast. In 2024, its Gurun and Jasin plants’ performance exceeded their P90 estimates by 3.63% and 1.36%, although this was offset by its Merchang plant’s underperformance (-6.54%) due to above-normal depth of flooding in January and December 2024. Despite the flood protection measures that have been taken following the incident in January 2024, the flood level in December 2024 was approximately 50% higher than the one in January. This affected 58 of the plant’s 240 string combiner boxes (SCB), resulting in a lower plant availability of 82.4% in December 2024. Temporary repair work was completed within the same month and the plant’s availability was restored to 99.8% in January 2025. Full rectification was completed by end-April 2025, with all affected SCB units replaced. To avoid recurrence, the company has put corrective measures in place, including raising the SCB mounting structure higher. Total rectification costs of about RM0.9 million and revenue loss estimated at RM1.5 million are expected to be covered by insurance.
QSP Semenanjung’s revenue slightly declined to RM135.2 million (2023: RM135.4 million) due to lower energy output. Operating cash flow fell to RM54.4 million in 2024 (2023: RM100.7 million), mainly due to a one-off payment of RM29.7 million to the engineering, procurement and construction (EPC) contractor vis-à-vis a variation order to the original contract, the payment of which was previously delayed due to the protracted settlement discussions between QSP Semenanjung and the EPC contractor. However, QSP Semenanjung’s liquidity remained healthy with the company holding approximately RM104.3 million in cash as of April 15, 2025, sufficient to meet its next sukuk obligations of RM49.2 million due in October 2025.
The rating case projects finance service coverage ratio at an average of 2.25x and a minimum of 1.82x during 2025-2035. Cash flow projections can withstand moderate stress scenarios, including plant availability of 97.6%, a 10% increase in operations and maintenance costs, or electricity generation at P99 estimates over the sukuk tenure.