RAM Ratings reaffirms rating of Lumut Maritime Terminal’s Islamic debt securities

Published on 09 September 2013

RAM Ratings has reaffirmed the long-term A1 rating of Lumut Maritime Terminal Sdn Bhd’s (“LMT” or “the Company”) RM60 million Bai’ Bithaman Ajil Islamic Debt Securities (2004/2017), with a stable outlook.

The reaffirmation of the rating continues to reflect the stable cashflow from the terms under the 15-year operations and maintenance agreement with Lekir Bulk Terminal Sdn Bhd (“LBT”); LBT caters to the coal-unloading requirements of TNB Janamanjung Sdn Bhd. The rating is also supported by the Company’s satisfactory operational track record as well as its healthy balance sheet and adequate debt coverage. As at end-December 2012, LMT’s gearing stood at 0.22 times. However, given the build up of cash versus its modest debt load of RM35 million, the Company has been in a net cash position since FY Dec 2010.

Meanwhile, RAM understands that the Company intends to collaborate with Vale International SA’s (“Vale”) on the provision of transshipment and marine services to handle the latter’s exports. Vale has been granted approval by the State Government of Perak to set up a private jetty in Teluk Rubiah in 2011 hence compromising LMT’s port exclusivity in Sungai Dinding, Perak. However, negotiations on this front are ongoing; we will continue monitoring the situation for new developments.

Elsewhere, the rating is also moderated by the dependence of LMT’s port operations on hinterland cargo and by the diminishing land bank at Lumut Port Industrial Park (an 885-acre industrial park located next to the port).

Media contact

Asif M Noh

(603) 7628 1175

asif@ram.com.my