MARC Affirms Its AA+IS Rating on Westports Malaysia Sdn Bhd's Rm2.0 Billion Sukuk Musyarakah Programme
MARC Affirms Its AA+IS Rating on Westports Malaysia Sdn Bhd's Rm2.0 Billion Sukuk Musyarakah Programme
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- 7 /12/2016 Latest Announcement - (News ID : 2016071200016) Latest Announcement News ID : 2016071200016 Subject : WESTPORTS MALAYSIA SDN BHD WESTPORTS MALAYSIA SDN BHD Organisation Name: MALAYSIAN RATING CORPORATION News Type: RATING ANNOUNCEMENT Reference Site: None Embargo Date: 12/07/2016 Embargo Time: 03:40 PM Expiry Date: 26/07/2016 Priority: Medium Summary: MARC AFFIRMS ITS AA+IS RATING ON WESTPORTS MALAYSIA SDN BHD'S RM2.0 BILLION SUKUK MUSYARAKAH PROGRAMME Attachments: No attachment available. Disclaimer: The user, including a user who is also a FAST Participant, expressly agrees that the use of this website which is accessible at https://fast.bnm.gov.my/ is at the user's sole risk. The information contained in this FAST website is compiled by MyClear Sdn. Bhd. (MyClear) and is provided on an "as is" basis without any representations or warranties of any kind, either expressed or implied. While MyClear makes every effort to ensure that information contained in the FAST website are accurate and disseminated in a timely and efficient manner, the user acknowledges that delays, errors, omissions or inaccuracies may occur. MyClear disclaims any liability pertaining to the consequences of any delays, errors, omissions or inaccuracies arising out of or relating to the FAST website or information, including but not limited to, any decision made or action taken by a user in reliance upon such information, or for damages suffered, whether direct, consequential, special, punitive, indirect or otherwise, notwithstanding having been advised of the possibility of such damages. In the event of any dispute, the official records of MyClear shall prevail. MyClear, Bank Negara Malaysia or any of its affiliates, officers, directors, agents or any other party involved in creating, producing or delivering the FAST website, shall not be liable for any direct, consequential, special, punitive, indirect, incidental or other damages arising out of or in any way connected with the use or inability to use the FAST website or information, whether based on contract, tort, liability or otherwise, even if advised on the possibility of any such damages. Content MARC has affirmed its AA+IS rating on Westports Malaysia Sdn Bhd's (Westports) RM2.0 billion Sukuk Musyarakah Programme with a stable outlook. In affirming the rating, the rating agency has considered the potential migration of container traffic volume by one of Westports' major clients, CMA CGM SA (CMA CGM), to Pasir Panjang Terminal in Singapore. CMA CGM, which contributed 3.31 million twentyfoot equivalent units (TEU), or 37% of Westports' total TEUs handled in 2015, is expected to move a portion of its existing traffic to Singapore following the setting up of a jointventure with the Port of Singapore Authority. The impact on Westports' business and financial performance from CMA CGM's move at this juncture is limited given that any decrease in the liner's transhipment throughput could be gradual and that a new shipping alliance set to launch by April 2017 could see some traffic being routed to Westports under a dual hub strategy which is likely to be pursued by the new alliance. MARC will monitor developments and take necessary rating action should CMA CGM's migration have a strongerthanexpected impact on Westports' performance. Westports' affirmed rating continues to be supported by its strong cash flow generating ability, stemming from a steady operational and sound productivity performance. The port retains a strong competitive position, underpinned by its strategic location along one of the world's busiest shipping lanes. These strengths are moderated by Westports' exposure to high client concentration risk and to the vagaries of the global shipping industry. As at end2015, Westports' container handling capacity stood at 11 million TEUs, which is expected to increase by 2.5 million TEUs by end2017. It remains the dominant port operator in Port Klang, which is ranked the 12th busiest container port globally. MARC views Westports' continued investments in upgrading its port capacity and operations have been key in generating throughput growth and maintaining strong operating efficiency. The port achieved a throughput growth of 8.3% yearonyear (yoy) to 9.1 million TEUs in 2015, translating to a CAGR of 9.2% between 2011 and 2015. For 2015, the port utilisation rate improved to 82.3% from 76.1% in the previous year. The higher port utilisation rate contributed to slightly longer vessel waiting time. MARC expects the vessel waiting time to improve gradually with the commencement of phase one of container terminal 8 (CT8) in April 2016. Westports' financial performance continues to be driven by container throughput, which contributed to 83.5% of operational revenue of RM1.58 billion in 2015 (2014: 83.2%; RM1.50 billion). The increased TEU handled was on the back of its existing clients' organic growth and increasing ad hoc transhipment calls. Cash flow from operations stood at a healthy RM688.6 million (2014: RM614.6 million) while free cash flow (FCF) recovered to RM39.4 million from deficits in previous years. The improvement in FCF was mainly on the back of lower capital expenditure despite upstreaming of higher dividends of RM394.1 million (2014: RM353.2 million). While Westports' debttoequity ratio stood at a moderate 0.62 times at end2015 (2014: 0.66 times), the rating agency expects the port operator to prudently manage its port expansion and debt levels. In 2016, management has budgeted RM750 million for expansion and maintenance capital expenses to be funded by internally generated funds and shortterm borrowings. Westports' outstanding amount under the sukuk programme is RM1.15 billion as at end2015; its first two payments of RM50 million each are due in April 2021 and May 2021 respectively. The outlook on Westports remains stable on expectations that the port operator will continue to maintain its operational and financial metrics at current levels. A prolonged economic downturn, reduction of port calls as a result of industry consolidation and/or erosion in its cash flow and leverage metrics would exert downward pressure on Westports' rating. Contacts: David Lee, +6032082 2255/ david@marc.com.my. July 12, 2016 [This announcement is available in the MARC corporate homepage at http://www.marc.com.my] DISCLAIMER This communication is provided by Malaysian Rating Corporation Berhad (MARC) on the basis of information believed by MARC to be accurate and reliable as derived from publicly available sources or provided by the rated entity or its agents. MARC, however, has not independently verified such information and makes no representation as to the accuracy or completeness of such information. Any assignment of a credit rating by MARC is solely to be construed as a statement of its opinion and not a statement of fact. A credit rating is not a recommendation to buy, sell, or hold any security. © 2016 Malaysian Rating Corporation Berhad https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016071200016&mode=DISPLAY&info=NEWS&screenId=PB010400 1/1
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