[RAM] RAM Ratings reaffirms Bintulu Port's AA1 rating

RAM Ratings has reaffirmed the AA1/Stable/P1 corporate credit ratings of Bintulu Port Holdings Berhad (BPHB or the Group). The reaffirmation is premised on BPHB’s healthy financial performance, along with the solid support that the Group enjoys from both the federal and state governments. BPHB operates Malaysia’s only export terminal for liquefied natural gas (LNG) and plays a pivotal role in the development of the Sarawak Corridor of Renewable Energy (SCORE). 

Bintulu Port Sdn Bhd (BPSB, a wholly owned subsidiary of BPHB) operates Malaysia’s sole LNG export terminal at Bintulu Port, which serves the LNG liquefaction plants of Petroliam Nasional Berhad (Petronas). Samalaju Port – operated by Samalaju Industrial Port Sdn Bhd (also a wholly owned subsidiary of BPHB) – commenced operations in June 2017, functioning as a logistical hub for the import of raw materials and export of finished products from heavy and energy-intensive industries based at Samalaju Industrial Park (SIP or the Park). SIP represents part of the SCORE’s agenda of developing and transforming Sarawak into a developed state by 2030.

The Group’s overall cargo throughput inched up 3.7% y-o-y to 50.14 mil tonnes in 2019 (2018: 48.34 mil tonnes), mainly buoyed by higher export volumes of LNG (+7.3%). In 9M 2020, total throughput handled at Bintulu Port and Samalaju Port contracted by 5.9% y-o-y to 34.86 mil tonnes (9M 2019: 37.05 mil tonnes), weighed down by supply chain disruptions across all sectors amid the COVID-19 crisis. Moving forward, we expect cargo throughput growth to mainly stem from the handling of bulk cargo at Samalaju Port, backed by expansions undertaken by the port’s anchor customers and new investors in the near to medium term. While heavy industries at SIP are vulnerable to global downturns, the risk is somewhat moderated as customers continue to invest significantly while revamping and expanding their facilities in the Park, given attractive investment incentives.  

As at end-September 2020, BPHB’s respective adjusted gearing ratio and funds from operations debt coverage (FFODC) ratio stood at 1.09 times and 0.25 times against RM1.47 bil of adjusted debts. We expect the ratios to improve to a respective 1.03 times and 0.27 times on average (base case: 0.92 times and 0.33 times) over the next three years on the back of a continued run down of the Group’s debt base and low projected capital spending. After factoring in the renewal of capitalised leases for BPHB (to take effect in 2023), the Group’s respective adjusted gearing ratio and FFODC are envisaged to weaken to an average of 1.51 times and 0.19 times in 2023 and 2024 (base case: 1.12 times and 0.27 times). BPHB’s liquidity is deemed superior in view of the Group’s RM747.22 mil of cash reserves against RM226.65 mil of contractual lease liabilities as at end-September 2020. 

Notably, the Bintulu Port Privatisation Agreement (PA) between BPSB, the Bintulu Port Authority (BPA) and the Government of Malaysia is co-terminous with Bintulu Port’s operating licence, which expires on 31 December 2022. The PA gives BPSB the option to extend the tenure of Bintulu Port’s operations for 30 years, at the discretion of the BPA. The risk of non-renewal of the licence is minimal as the government has given approval in principle for the consideration of its renewal, subject to terms and conditions to be further negotiated and agreed upon. 


Analytical contact
Aw Wei Xuan 
(603) 3385 2506
weixuan@ram.com.my

Media contact
Padthma Subbiah
(603) 3385 2577
padthma@ram.com.my