KUALA LUMPUR (Aug 1): MARC Ratings has affirmed its rating of Penang Port Sdn Bhd’s (PPSB) Islamic Medium-Term Notes Issuance Programme of up to RM1.0 billion at AA-IS with a stable outlook.

PPSB’s rating affirmations, including a strong operational track record, healthy cash flow and a long-term concession agreement expiring in March 2055, are considered to be counterbalanced by its moderate equity base and the throughput volume impact regarding the global economic slowdown and geopolitical events.

In a note on Tuesday (Aug 1), MARC Ratings maintained a steady financial performance forecast for PPSB.

For the first quarter of 2023, PPSB's revenue rose 8.3% year-on-year (y-o-y) to RM120.2 million, due to higher throughput volume and the turnaround of its cruise terminal operations.

Moreover, it said throughput volume for container increased y-o-y by 3.5% to 331,816 twenty-foot equivalent units, and conventional cargo by 9.1% to 1.3 million metric tons.

During the previous corresponding period, the cruise segment turned around from a loss of RM300,000 to an operating profit of RM3.4 million, benefiting from the return of international cruise ships to the terminal since early July 2022. 

This led to an increase in empty containers to serve hinterland exports, and lower service cancellations by container operators, while ports in China recommence their operations.

Moving forward, ferry operations are expected to halve losses to around RM8 million per annum with the commissioning of four new vessels. 

Pre-tax profit improved by 44.0% y-o-y to RM15.5 million for the first quarter of 2023, with operating profit before interest, tax, depreciation and amortisation interest coverage remaining healthy at three times.

With borrowings at RM1.0 billion, the oustanding amount comprises the rated sukuk, which will be amortised from December 2026 onwards when the first RM200 million is due.

Overall, MARC Ratings does not foresee a sharp increase in borrowings, given that PPSB’s capital expenditure programme is expected to be funded internally in terms of infrastructure and equipment.