MARC Ratings has affirmed its AA-IS rating on Quantum Solar Park (Semenanjung) Sdn Bhd’s (QSP Semenanjung) outstanding RM775.0 million Green Sustainable and Responsible Investment Sukuk with a stable outlook. QSP Semenanjung owns three 50MW power plants located in Gurun, Kedah; Jasin, Melaka; and Merchang, Terengganu.
In 2022, energy generation from the Merchang plant surpassed its P90 projection by 4.00%, while energy generation was marginally lower than projections for the Gurun (-0.06%) and Jasin (-0.02%) plants due to lower solar irradiance. Collectively, total generation exceeded projections by 1.31%.
Cash flow from operations was in line with projections at RM113.7 million. QSP Semenanjung has built up a strong liquidity position with cash balances of RM186.2 million as at end-February 2023, which is more than sufficient to meet its RM100.1 million sukuk principal repayment and profit payment due in 2023.
Under base case projections, QSP Semenanjung is expected to achieve minimum and average finance service coverage ratios (FSCR) of 2.06x and 2.50x. The projected cash flow can withstand moderate stress scenarios such as lower plant availability of 97.6%, a 10% increase in operations and maintenance cost or lower electricity generation under P99 estimates throughout the sukuk tenure.
The rating remains underpinned by the strength of QSP Semenanjung’s 21-year power purchase agreement with Tenaga Nasional Berhad, under which the national power company will purchase energy generated by its plants at a fixed tariff. The rating is moderated by the risk of significant variability in solar irradiance as well as performance risks associated with the plants’ operations.