KUALA LUMPUR (Sept 10): MARC Ratings has on Tuesday affirmed its rating of Penang Port Sdn Bhd’s (PPSB) Islamic Medium-Term Notes Issuance Programme of up to RM1 billion at AA-IS with a stable outlook, on the back of the company's strong track record as the operator of Penang Port, and its ability to generate steady and healthy cash flow.

In a press announcement, MARC Ratings said the rating affirmation also factors in PPSB’s long-term concession agreement that is expiring in March 2055 and the shared expertise among ports under its parent, MMC Port Holdings Sdn Bhd. 

MMC Port is part of the MMC Corp Bhd, which was taken private by its largest shareholder Seaport Terminal (Johore) Sdn Bhd in September 2021. Seaport Terminal is owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary.

"The rating is moderated by the potential impact on throughput volume from global trade slowdown and supply chain disruptions," the credit rating agency warned. 

According to MARC Ratings, PPSB's revenue grew by 9.2% year-on-year (y-o-y) to RM131.3 million for its first quarter of 2024 (1QFY2024), driven by higher throughput volume and increased associated marine services. 

The throughput volume for container and conventional cargo rose by 10.3% and 4.3% y-o-y in 1QFY2024 to 365,945 twenty-foot equivalent units and 1.4 million tonnes respectively. 

"Growth in container handling was driven by higher import and export volumes for laden containers of paper products, consumable items and electrical appliances, while conventional cargo volume was boosted by break bulk products," MARC Ratings said.  

Beyond that, the overall throughput volume is forecast to grow by about 3.5% in 2024, according to the credit rating agency, supported by higher hinterland activities from new factories in Penang’s industrial parks. 

In terms of PPSB's debt servicing, MARC Ratings noted that the operating profit before interest, tax, depreciation and amortisation interest coverage remained healthy at 3.0 times in 1QFY2024. 

Meanwhile, borrowings remained unchanged y-o-y at RM1 billion, fully comprising the outstanding amount under the rated sukuk, with the first repayment of RM200 million due in December 2026. 

"The rating agency does not envisage a substantial increase in borrowings given PPSB’s capex programme is mainly geared towards structural improvements and port equipment enhancements that are manageable through internal funds. PPSB also has the option to defer some of its capex spending according to capacity requirements," MARC Ratings added. 

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