MARC has affirmed the AAAIS
rating on tolled road
concessionaire Projek Lebuhraya Usahasama Berhad's (PLUS Berhad) RM23.35
billion Sukuk Musharakah Programme (sukuk) with a stable outlook. The rating affirmation continues to
incorporate a two-notch rating uplift from PLUS Berhad’s standalone rating of
AA on the basis of support assumption from the Malaysian government with
respect to the programme. The support assumption is based on the government’s
golden share and indirect shareholding via UEM Group Berhad (51.0%), a
wholly-owned subsidiary of Khazanah Nasional Berhad, and the Employees
Provident Fund Board (49.0%) in the concession company; as well as the
interdependence between default events for the rated sukuk and RM11.0 billion
government-guaranteed sukuk (GG Sukuk) that matures after the rated programme.
MARC also considers the critical role of the North-South Expressway
(NSE), PLUS Berhad’s 80% revenue contributor,
in the country’s transportation system.
PLUS Berhad’s standalone rating is supported by the
stable traffic performance of its matured toll concessions, namely PLUS
expressways (including New Klang Valley Expressway (NKVE) and the NSE),
North-South Expressway Central Link (NSECL), Malaysia-Singapore Second Link
(MSSL), Butterworth-Kulim Expressway (BKE) and the Penang Bridge; as well as
the company’s satisfactory debt service coverages. The rating is constrained by
the group’s high leveraged position and the potential impact on traffic volume
from upcoming new highways and alternative modes of transport. In addition,
traffic volume growth remains susceptible to the country’s economic
performance.
PLUS Berhad’s overall traffic volume registered in
2013 was consistent with the rating agency’s expectations. For the first nine
months of 2014 (9M2014), the NSE recorded a year-on-year (y-o-y) traffic growth
of 2.3% to 12.35 billion passenger car unit-kilometres (PCU-km). The NKVE
registered subdued traffic volume growth which was mainly attributed to the
expressway’s lane-widening works, while the Penang Bridge recorded negative growth
following the opening of the Second Penang Bridge on March 1, 2014. Traffic
volume on the MSSL remained stable, notwithstanding the 75% increase in vehicle
entry permit fees on foreign-registered cars entering Singapore from August
2014. This was partly due to the commencement of tolling operations on the
Eastern Dispersal Link Expressway, the highway connecting the Sultan Iskandar
Customs, Immigration and Quarantine Complex in Johor Bahru to the southern
route of the NSE. This has diverted some traffic volume to the MSSL.
In 2013, PLUS Berhad recorded a revenue of RM3,246
million (2012: RM3,046 million) with a pre-tax profit of RM34.4 million (2012:
pre-tax losses of RM4.5 million), in line with the traffic performance of its
concession assets. In 9M2014, PLUS Berhad reported a toll revenue of RM2,462
million against a projected revenue of RM3,322 million for the full year 2014.
The company’s available cash balances (9M2014: RM3,066 million; 2013: RM3,791
million) have afforded PLUS Berhad the ability to make higher redeemable
convertible unsecured loan stocks (RCULS) coupon payments than the projected
annual RM335 million payment (2014: RM600 million; 2013: RM750 million), having
complied with its covenanted post-distribution finance service cover ratio of
2.00 times. The payments, coupled with high amortisation charges of intangible
assets and profit payments on the sukuk, have widened PLUS Berhad’s accumulated
losses to RM1,067 million in 2013 (2012: RM343 million) resulting in lower
shareholders’ funds and a higher leverage ratio as measured by its
debt-to-equity (DE) ratio of 13.1 times (2012: 10.0 times). Although PLUS
Berhad is not required to maintain a DE ratio covenant, the company’s leverage
is deemed high for its standalone rating.
The stable outlook is premised on MARC’s expectations
of continued satisfactory traffic performance of PLUS Berhad’s concession
assets; that PLUS Berhad should continue to meet its obligations comfortably
and the company is taking sufficient measures to improve its overall metrics to
be in line with its standalone rating.
Contacts: Noor Izyani Saad, +603-2082 2256/ izyani@marc.com.my; David
Lee, +603-2082 2255/ david@marc.com.my.
January 28, 2015
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