KUALA LUMPUR: RAM Rating Services Bhd has reaffirmed the A1/Stable rating of Lumut Maritime Terminal Sdn Bhd’s (LMT) RM60mil Bai’ Bithaman Ajil Islamic debt securities (2004/2017) (BaIDS).
It said on Thursday the rating remains anchored by the continued steady cashflow from LMT’s operations and maintenance agreement with Lekir Bulk Terminal Sdn Bhd (LBT), which at present caters to the coal-unloading requirements of TNB Janamanjung Sdn Bhd.
“The company’s rating is moderated by the dependence of its small port operations primarily on hinterland cargo, keeping a lid on growth potential.
“Meanwhile, revenues from the sale of land in the Lumut Port Industrial Park – which LMT has developed – are expected to taper, given limited land left to be sold, which will somewhat reduce its income diversity,” said the ratings agency.
PERAK CORPORATION BHD, which is listed on the Main Board of Bursa Malaysia, holds a 50% stake plus one share in LMT.
RAM Ratings said LMT’s credit strength reflected its healthy balance sheet with a gearing ratio at 0.2 times.
It also said LMT has been in a net cash position since FY December 2010.
LMT’s funds from operations debt coverage ratio were at 1.2 times for FY2013.
The ratings agency pointed out LMT’s debt protection metrics were expected to stay robust based on the light and reducing debt load.
LMT has a 20-year concession agreement (CA) with the Perak Government where it has exclusive port operations within a 30-km radius. However, the agreement ends in July 2015.
“It remains to be seen whether the CA will be extended beyond next year, and we note that LMT’s exclusivity had been compromised in 2011 following the State Government’s approval of the establishment of a private jetty in Teluk Rubiah by Vale International SA,” it added.