Published on 13 November 2014
RAM Ratings has reaffirmed the A1/Stable
rating of Lumut Maritime Terminal Sdn Bhd’s (LMT or the Company) RM60
million Bai’ Bithaman Ajil Islamic Debt Securities (2004/2017) (BaIDS).
The rating remains anchored by the continued steady
cashflow from LMT’s operations and maintenance agreement with Lekir Bulk
Terminal Sdn Bhd (LBT), which at present caters to the coal-unloading
requirements of TNB Janamanjung Sdn Bhd. The Company’s rating is
moderated by the dependence of its small port operations primarily on
hinterland cargo, keeping a lid on growth potential. Meanwhile, revenues
from the sale of land in the Lumut Port Industrial Park – which LMT has
developed – are expected to taper, given limited land left to be sold,
which will somewhat reduce its income diversity.
LMT’s credit strength reflects its healthy balance
sheet, as evinced by a gearing ratio that has hovered at 0.2 times. Of
note, LMT has been in a net cash position since FY Dec 2010. The
Company’s funds from operations debt coverage ratio clocked in at 1.2
times for FY Dec 2013. With a light and reducing debt load, its debt
protection metrics are expected to stay robust.
Under a 20-year Concession Agreement (CA) with the
State Government of Perak, LMT has port operation exclusivity within a
30-km radius until July 2015. It remains to be seen whether the CA will
be extended beyond next year, and we note that LMT’s exclusivity had
been compromised in 2011 following the State Government’s approval of
the establishment of a private jetty in Teluk Rubiah by Vale
International SA.
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