Maju Expressway Sdn Bhd - 2009

MARC has affirmed the A+ID  and MARC-2ID /A+ID ratings on toll road concessionaire Maju Expressway Sdn Bhd’s (MESB) RM380.0 million Al Bai’ Bithaman Ajil Primary Serial Medium Term Notes (BBA MTN) and up to RM80.0 million Murabahah Commercial Papers/Medium Term Notes (MCP/MTN) respectively (Islamic Securities). The ratings outlook is stable. The affirmed ratings acknowledge that while traffic and revenue levels have continued to underperform compared to the original forecast, downside risk has reduced on account of the strong growth in the expressway’s average daily traffic  volumes since MARC’s last rating action. The ratings incorporate MESB’s adequate available liquidity to meet its debt servicing obligations during the extended ramp-up period.

MESB is the concessionaire responsible for the design, construction, maintenance, operations, management and toll collection of the 26km Maju Expressway (MEX). The highway begins from the Putrajaya Link Interchange and ends at Jalan Tun Razak, passing through several densely populated township areas via five interchanges in the southern corridor of the Klang Valley.

Actual traffic volumes on the MEX have lagged behind forecast numbers, particularly for the Putrajaya toll plaza. This is due to the relatively optimistic assumptions regarding population and employment growth in Putrajaya and Cyberjaya which have yet to materialise. In 2008, the Putrajaya and Salak South toll plazas registered an average daily traffic (ADT) 56.0% and 21.0% lower than forecast respectively. Overall, MEX registered a total ADT of 49,045 in 2008, 45% lower than its forecast of 88,667. During the first six months of 2009, however, MEX achieved a 36.6% higher ADT compared to the corresponding prior-year period. Increasing awareness among the public, supported by improved signage, has contributed to the improved traffic flow at the highway. As such, during the first six months of 2009, the variance narrowed to negative 37.2% with an ADT of 60,629, notwithstanding a higher forecast ADT of 96,616. Despite the lower-than-projected traffic volume, MESB’s finance service cover measures remain adequate.

In financial year ended December 2008, MESB posted a pre-tax loss of RM9.8 million against a revenue of RM31.3 million. The loss was attributed to MESB’s fixed cost, which constituted 74.0% of MESB’s total costs, 60% of  which were finance costs.  The current cash flow from  tolling operations  is inadequate to
service MESB’s debt obligation as reflected by the CFO interest coverage of 0.22 times (x). Nevertheless, MESB’s cash reserves of RM117.2 million provides sufficient liquidity to meet debt service shortfalls. The bulk of the cash reserves were derived from an advance of RM87.4 million made by the shareholders in compliance with the requirement to maintain a disbursed facilities-to-shareholders’ fund ratio of 70:30 under the rated issuance. The shareholders are also required to maintain the ratio for a period of nine years after the issuance of the Islamic Securities.

The current stable outlook for the notes reflects the prefunding of profit payments under the Islamic Securities and anticipated steady growth in traffic volumes. 

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