Projek Lebuhraya Usahasama Bhd - 2012

MARC has affirmed its AAAIS rating on Projek Lebuhraya Usahasama Berhad's (PLUS Berhad) RM23.35 billion Sukuk Musharakah Programme. The rating outlook is stable. PLUS Berhad holds a portfolio of tolled expressways, of which the North-South Expressway (NSE) is its largest revenue source.

The affirmed rating continues to incorporate a two-notch rating uplift from PLUS Berhad’s standalone rating of AA based on MARC’s assumption of full and timely government support with respect to the programme. Factors that support this assumption include the government’s support and golden share in the concession company, the interdependence between default events for the rated sukuk and RM11.0 billion government-guaranteed sukuk (GG Sukuk) which matures after the Sukuk Musharakah Programme and NSE’s function as a critical national transportation link. Accordingly, any signs of weakening support may have an adverse impact on the rating.

PLUS Berhad’s standalone rating reflects the strong traffic performance of its toll concession portfolio and the company’s sizeable liquidity position. The rating is moderated by PLUS Berhad’s high gearing level, potential traffic diversion towards new competing toll roads and inherent traffic vulnerability to the country’s economic performance.

Owned by UEM Group Berhad and Employees Provident Fund Board via PLUS Malaysia Berhad, PLUS Berhad was incorporated to facilitate the purchase of all toll concessions previously held by the then-listed PLUS Expressways Berhad. The portfolio consists of five toll concessions, of which the key concession, the 772km NSE, is projected to generate over 80% of PLUS Berhad’s revenue over the tenure of the programme. Traffic volume on the NSE in the nine-month period ended September 30, 2012 (9M2012) stood at 10.89 billion passenger car unit-kilometre (PCU-km), registering an annualised growth rate of 4.7%, while traffic of the remaining toll concessions recorded an annualised growth rate of  between 1.1% and 6.2% in the same period. The traffic growth rates were in line with projections.

In 9M2012, PLUS Berhad recorded revenue of RM2.20 billion against full-year projections of RM3.00 billion. On an annualised basis, actual revenue was marginally lower than projected due to the shorter operating  period as  the concession assets were acquired on January 12, 2012. Pre-tax losses during the period stood at RM93.6 million against projected full-year pre-tax losses of RM655.9 million due to lower operating expenses and higher toll collection from the higher-than-projected traffic growth of the portfolio of toll roads. The company also recorded better-than-expected cash balance which would help raise PLUS Berhad’s projected minimum and average finance service cover ratio (FSCR) above the originally projected 1.99 times and 4.85 times. The higher FSCR allowed PLUS Berhad to distribute RM335.0 million in RCULS coupons in October 2012 and the company may make future distributions going forward, subject to the covenants of the programme.

The stable outlook reflects MARC’s expectations that PLUS Berhad should continue to meet its obligations comfortably and the ongoing financial support from the government.

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