MARC Ratings has upgraded its rating on port operator Johor Port Berhad’s (JPB) Islamic Medium-Term Notes (IMTN) Programme to AAIS and revised the outlook to stable from positive. The rating on the Islamic Commercial Papers Programme has been affirmed at MARC-1IS. The programmes have a combined aggregate limit of RM1.0 billion with the current outstanding comprising entirely IMTNs of RM600.0 million.
The upgrade on JPB’s long-term rating reflects its earnings resilience during the period of trade uncertainty, supported by Johor Port’s geographically strategic location as a key gateway port in southern Peninsular Malaysia and its diversified cargo handling capabilities. JPB’s long operating track record and concession rights extending to 2055 ensure long-term earnings visibility. Located within the Pasir Gudang Industrial Area, Johor Port serves as an important import and export gateway for the southern region, while its diversified cargo handling capabilities provide revenue stability across trade and industry cycles. JPB also benefits from being part of MMC Corporation Berhad, which contributes industry expertise and strategic oversight.
In 1H2026, JPB’s revenue grew 9.7% y-o-y to RM476.0 million (1H2025: RM433.9 million), while operating profit rose 28.4% to RM228.29 million (1H2025: RM177.73 million), driven by stable container throughput, stronger dry bulk and breakbulk cargo handling activities, and the higher tariff implemented in December 2025. Operating margin remained strong at 47.96%, translating to a strong OPBITDA interest coverage of 9.7x. The port continued to benefit from industrial activities within its hinterland, including the Pasir Gudang Industrial Area and Tanjung Langsat Industrial Complex, while longer-term growth prospects were supported by foreign direct investment, logistics infrastructure expansion, and developments related to the Johor–Singapore Special Economic Zone.
Cash flow generation remained robust, with cash flow from operations of RM214.4 million and strong cash flow coverage metrics in 1H2026. Leverage remained moderate, with total borrowings of RM607.2 million and a debt-to-equity ratio of 0.45x as at end-June 2026. Liquidity remained supported by sizeable cash balances amounting to RM411.1 million as at end-June 2026 and a manageable debt maturity profile, with the next major sukuk repayment of RM200.0 million only due in October 2027.
Balancing these strengths are risks associated with fluctuations in global trade activity and vessel traffic, and more recently the geopolitical conflict in the Middle East. The marine services segment recorded softer performance due to lower activity at Pengerang and weaker LNG vessel traffic. JPB has outlined a sizeable capital expenditure programme of up to RM1.8 billion over the next five years, covering equipment purchases, infrastructure rehabilitation and capacity optimisation initiatives. Funding requirements are expected to be met through a combination of internally generated funds and additional borrowings, including a planned RM250.0 million drawdown in 2027 and a further RM500.0 million between 2028 and 2029. While leverage is expected to increase, management expects the debt profile to remain manageable given the company’s strong earnings and cash flow generation.