RANHILL POWERTRON II SDN BHD - 2021 |
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| Report ID | 6053668 | Popularity | 741 views 86 downloads | |||||
| Report Date | May 2021 | Product | ||||||
| Company / Issuer | Ranhill Powertron II Sdn Bhd | Sector | Infrastructure & Utilities - Power | |||||
| Price (RM) |
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| Rationale |
Rating action MARC has affirmed its ratings on Ranhill Powertron II Sdn Bhd’s (RPII) RM90.0 million outstanding Islamic Medium-Term Notes (IMTN) at AAIS and RM350.0 million outstanding guaranteed IMTN at AAAIS(fg). The outlook on the ratings is stable. Rationale The AAIS rating reflects favourable terms under the Power Purchase Agreement (PPA) which allocate demand risk and fuel price risk to the offtaker, Sabah Electricity Sdn Bhd (SESB), an 83%-owned subsidiary of Tenaga Nasional Berhad (TNB). The rating also incorporates the power plant’s commendable operating performance to date and its ability to generate operating cash flow (CFO) to achieve minimum and average pre-distribution finance service cover ratios (FSCRs) of 2.52x and 2.60x over the next two years (2021–2022). The AAAIS(fg) rating on the guaranteed IMTN reflects the unconditional and irrevocable Kafalah guarantee provided by Danajamin Nasional Berhad, on which MARC has a long-term counterparty credit rating of AAA/stable. RPII owns and operates the 190MW combined-cycle gas turbine (CCGT) Rugading Power Station in Sabah under a 21-year PPA with SESB. As at date, the plant’s operational performance is in compliance with the minimum requirements under the PPA. The plant’s cumulative unplanned outage rate (UOR) in 2020 was 2.96%, well within the unplanned outage limit (UOL) of 4.0%. Accordingly, RPII received full capacity payments (CP) of RM97.5 million and achieved full fuel cost pass-through on meeting the heat rate requirement. Receivables collection from SESB has not been timely; as a result, CFO was lower at RM53.3 million in 2020 (2019: RM104.5 million). Despite the delay, any amount overdue has not exceeded 60 days. Its liquidity standing at RM87.5 million as at end-2020 would be sufficient to meet the IMTN repayment of RM50.0 million in June 2021. The final repayment of RM40 million for the tranche 1 IMTN is in June 2022. The CFO will decline from 2023 onwards due to the step-down in the capacity rate financial (CRF) from the current RM36.50 kW/month to RM23.80 kW/month. However, this will occur after the non-guaranteed IMTN is fully repaid and when the guaranteed IMTN begins its repayments. Any concern on cash flow coverage following the step-down of the CRF will be mitigated by RPII’s liquidity position. Notwithstanding this, the interest of the sukukholders of the guaranteed IMTN is protected under the Kafalah guarantee from Danajamin. Rating Outlook The stable outlook on the non-guaranteed notes reflects MARC’s expectation that RPII’s power plant will continue to maintain its operational performance and that the company will continue to adhere to prudent financial management. Rating Trajectory Upside scenario Upgrade of the rating on the non-guaranteed notes is unlikely given the step down in the capacity rate financial (CRF) from 2023 onwards as well as the expiry of tranche 1 of the IMTN in less than 2 years. Downside scenario The rating on the non-guaranteed notes could come under pressure in the event of significant deterioration of the power plant’s operational performance affecting RPII’s financial metrics. Key strengths
Key risk
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