CREDIT ANALYSIS REPORT

QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD - 2022

Report ID 605389004687 Popularity 101 views 30 downloads 
Report Date Apr 2022 Product  
Company / Issuer Quantum Solar Park (Semenanjung) Sdn Bhd Sector Infrastructure & Utilities - Solar
Price (RM)
Normal: RM500.00        
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Rationale
Rating action     
MARC Ratings has affirmed its AA-IS rating on Quantum Solar Park (Semenanjung) Sdn Bhd’s (QSP Semenanjung) RM1.0 billion Green Sustainable and Responsible Investment (SRI) Sukuk with a stable outlook. The total outstanding sukuk stood at RM855.0 million as at end-January 2022. 

Rationale     
The rating affirmation reflects the strength of the project fundamentals underpinned by three 21-year solar power purchase agreements (SPPAs) with Tenaga Nasional Berhad (TNB) (AAA/Stable). Under the SPPAs, the demand risk is largely eliminated as the national power company will purchase the energy generated by three 50MW solar photovoltaic plants (PV) at a fixed tariff. The three PV plants are held by three project companies — QSP (Kedah) Sdn Bhd, QSP (Melaka) Sdn Bhd and QSP (Terengganu) Sdn Bhd — of which QSP Semenanjung has 100% ownership. The rating is moderated by the variability in solar irradiance and unexpected events that may affect the plants’ operational performance.

For 2021, energy production from all three plants — in Gurun, Kedah; Jasin, Melaka; and Merchang, Terengganu — exceeded P90 forecasts by an average of 6.4%. Accordingly, QSP Semenanjung registered higher consolidated revenue by 6.2% at RM144.6 million and earnings before interest, tax, depreciation and amortisation (EBITDA) by 7.3% at RM123.7 million compared with projections. Its liquidity position improved to RM150.3 million, which is more than sufficient to meet its profit payment and principal repayment obligations of RM49.2 million in April 2022 and RM48.7 million in October 2022.

Under the P90 base case projections, the project’s minimum and average finance service coverage ratios (FSCR) stood at 1.99x and 2.38x, providing a comfortable buffer for sukuk repayments during the remaining tenure of the sukuk programme. Our sensitivity analysis demonstrates that the projected cash flow can withstand moderate stress scenarios of P99 energy production, lower plant availability of 97.6% and an increase in operations and maintenance (O&M) cost by 10%.

Rating outlook     
The stable outlook assumes that QSP Semenanjung’s plants will continue to meet P90 energy generation projections and not encounter significant operational issues.

Rating trajectory

Upside scenario     
The rating could be upgraded if the plants continue to record strong operating performance, and are able to build up a strong liquidity buffer and reduce borrowings.

Downward scenario     
Downward pressure on the rating would materialise if the plants’ performance falls substantially below expectations due to unforeseen events such that QSP Semenanjung’s debt service coverage metrics are significantly impacted. 

Key strengths
Demand risk mitigated by terms in the solar power purchase agreements
Energy generation higher than projections
Geographic diversification of solar power plants

Key risks
Significant variability in solar irradiance
Unexpected events weighing on plants’ operational performance


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