MARC has
affirmed its AAAIS
rating on
Projek Lebuhraya Usahasama Berhad's (PLUS) RM23.35 billion Sukuk Musharakah
Programme (sukuk) with a stable outlook. PLUS is the
toll concessionaire of five major highways in Malaysia, of which the
772-kilometre (km) North-South Expressway (NSE) is its key highway in terms of
revenue generation.
The rating
affirmation continues to incorporate a two-notch rating uplift from PLUS’
standalone rating of AA on the basis of support assumption from the Malaysian
government with respect to the sukuk. Among the key factors supporting this
assumption are the interdependence between default events for the rated sukuk
and the RM11.0 billion government-guaranteed sukuk (GG Sukuk) maturing after
the rated programme. In addition, MARC considers the government’s golden share
and indirect major shareholding in PLUS as well as the critical role of the NSE in the country’s
transportation system as factors underpinning the rating uplift. PLUS is
jointly owned by UEM Group Berhad, a wholly-owned subsidiary of Khazanah
Nasional Berhad, and the Employees Provident Fund Board.
PLUS’
standalone rating is premised on its satisfactory cash flow coverages on the
back of stable traffic performance of its portfolio of matured highways
comprising the New Klang Valley Expressway (NKVE) and the NSE, the North-South
Expressway Central Link (NSECL), the Malaysia-Singapore Second Link (MSSL), the
Butterworth-Kulim Expressway (BKE) and the Penang Bridge. Moderating the rating
is PLUS’ high gearing level and the potential impact on traffic volume from new
highways and alternative transportation modes.
For the first
nine months of 2016 (9M2016), the NSE registered a moderate 4.4% growth in
traffic volume to 13.4 billion passenger car unit-kilometres (PCU-km) while the
NKVE recorded a strong growth of 8.1% to 2.3 billion PCU-km, mainly supported
by growing commuters in north-west Klang Valley. The MSSL also showed a marked
improvement of 8.5% growth during the period, attributable to the new
developments surrounding Nusajaya and improved connectivity to west Johor Bahru
via Gelang Patah. Meanwhile, the NSECL grew 8.6% in traffic volume in 9M2016,
despite competition from the new Light Rail Transit extension to Putra Heights.
However, both the Penang Bridge and BKE registered minimal traffic growth given
that the highways are already mature.
For 9M2016,
PLUS recorded a revenue of RM2.96 billion, which included the recognition of
toll compensation from the government amounting to RM268.7 million due to the
deferment of the scheduled toll hike on 1 January 2016. The company’s net operating cash
flow of RM1.99 billion (9M2015:
RM1.95 billion) was sufficient to cover its debt service obligations of
RM1.54 billion. PLUS’ finance service coverage ratio (FSCR) post-coupon payment
on its redeemable convertible unsecured loan stock (RCULS) of RM720 million
remained adequate with estimated ending cash balance of RM2.3 billion at
end-2016. However, the company’s gearing level further deteriorated on the back
of high accumulated losses due to higher amortisation charges on concession
assets and substantial financing costs and coupon payments on the RCULS. PLUS redeemed its first principal
repayment of RM200 million in January 2017.
PLUS’
pre-distribution FSCR would remain adequate under the revised base case cash
flow projection. The base case assumes that PLUS will receive compensation from
the government in a timely manner in lieu of a toll hike deferral. The
sensitivity analysis shows PLUS’ cash flow is more susceptible to substantial
traffic underperformance relative to a delay in receipts of government
compensation throughout the concession period. While the risk of significant
traffic underperformance is viewed to be remote, prolonged delays in toll rate
increases as per the concession agreement coupled with the absence of
government compensation throughout the concession period will result in an FSCR
of below 2.00 times in 2026.
The stable
outlook is premised on MARC’s expectations that the concession assets of PLUS
will continue to achieve satisfactory traffic performance that is in line with
projections and the company’s credit metrics will remain commensurate with its
standalone rating.
Contacts: Adib
Asilah, +603-2082 2243/ asilah@marc.com.my;
David Lee, +603-2082
2255/ david@marc.com.my.
April 18, 2017
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.