Jan 28, 2014 -
MARC has affirmed its rating of
AA-IS on Cerah Sama Sdn Bhd’s (Cerah Sama) RM420.0 million sukuk issued under
its RM750.0 million Sukuk Musharakah Programme with a stable outlook.
Cerah Sama is the investment
holding company of Grand Saga Sdn Bhd (Grand Saga), the concession holder of
the 11.5-kilometre Cheras-Kajang Highway. Cerah Sama also acts as the
investment vehicle of its major shareholders, Taliworks Corporation Berhad and
the South East Asian Strategic Asset Funds L. P. (SEASAF) to seek investment
opportunities in other toll roads, both locally and abroad. MARC notes that
Cerah Sama has no other debt at the consolidated level other than the rated
senior debt of RM420.0 million.
The rating reflects Cerah Sama’s
adequate cash flow coverage supported by the discretionary cash flow, in the
form of upstreamed dividends from Grand Saga. As Grand Saga provides the main
source of repayment for the RM420.0 million sukuk issuance, the rating
primarily hinges on Grand Saga’s credit profile. Supporting Grand Saga’s
standalone metrics are the stable cash flow generation on the back of the
highway’s matured traffic performance and strong operational track record. The
key moderating factors include the dependency on toll rate hikes to service
debt and potential impact on traffic volume from the Klang Valley Mass Rapid
Transit (MRT) project. The current rating does not factor in any drawdown of
the remaining RM330.0 million of availability under the Sukuk Musharakah
Programme for potential business acquisitions.
For the ten-month financial
period ended October 31, 2013 (10M2013), Cerah Sama recorded revenue of RM50.5
million against projected RM51.2 million on the back of lower traffic volume
following the closure of the left-most lane for MRT construction works near the
Bandar Tun Hussein Onn interchange (Kuala Lumpur-bound). The construction work
is expected to last until mid-2014. While the commencement of MRT operations in
2017, could affect Grand Saga’s traffic volumes, MARC believes the impact will
be temporary given the highway’s stable demand profile supported by the
surrounding township development. Assuming the timely implementation of the
scheduled toll hikes, MARC’s cash flow sensitivity analyses of Cerah Sama’s
latest financial projections demonstrate that it can still sustain debt
servicing under a stress scenario of 5.0% lower traffic growth per annum
throughout the sukuk tenure. Although Cerah Sama’s current cash balance
provides ample buffer against traffic underperformance, MARC is mindful that any
potential acquisitions and/or aggressive dividend policy may weigh on the
company’s liquidity position.
The stable outlook continues to
hinge on MARC’s assumptions that the political and regulatory environment would
remain supportive of Cerah Sama’s business operations as evidenced by the
timely compensation from the government. Although the stable traffic profile of
the highway provides an adequate finance service coverage ratio of more than
1.75 times under most scenario tests, the ratings or outlook could come under
pressure if Cerah Sama’s credit profile changes materially as a result of a
sizeable business acquisition.
Contacts:
Tan Eng Keat, +603-2082 2265/ engkeat@marc.com.my;
David Lee, +603-2082 2255/ david@marc.com.my.
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