MARC has affirmed its AA-_IS rating on Sinar Kamiri Sdn Bhd’s Green Sustainable and Responsible Investment (SRI) Sukuk Wakalah of up to RM245.0 million. The rating outlook is stable.

Sinar Kamiri is a special purpose project company incorporated to build, own and operate a 49.0MWac solar photovoltaic plant (SPP) in Sungai Siput, Perak. The rating primarily reflects Sinar Kamiri’s healthy project fundamentals that are underpinned by a 21-year power purchase agreement (PPA) with Tenaga Nasional Berhad (TNB) to purchase energy generated by the plant at a fixed tariff. This is deemed sufficient to meet the sukuk obligations. The rating is, however, moderated by the risk of variability in solar irradiance which determines the amount of energy generated and performance risks associated with plant operations.

The plant continued to meet its operational metrics as the actual electricity generated of 85,818 MWh was 3.4% higher than the P90 estimates in 2019. Accordingly, Sinar Kamiri posted higher revenue of RM36.4 million against a projected RM33.9 million. Cash flow from operations (CFO), however, was lower at RM10.8 million largely due to a payment obligation related to the plant’s construction. The company had also expected to receive goods and services tax (GST) refunds of RM10.25 million in 2019 which is now projected to be received in 2020. As at end-April 2020, total cash balances stood at RM39.7 million, which is sufficient to meet sukuk obligations of RM6.8 million and RM16.9 million due at end-July 2020 and end-January 2021.

Under MARC’s sensitivity analysis on the cash flow projection, the minimum and average FSCRs with cash stood at 2.11x and 2.39x through the sukuk tenure. The sensitised case assumes no GST refunds, higher plant unavailability and an increase in operational cost. The stable outlook reflects MARC’s expectation that Sinar Kamiri will continue to maintain the plant’s operational performance and generate stable income streams that remain supportive of project fundamentals.

As electricity production is classified as essential services, the plant’s operations were not affected by the imposition of the movement control order following the COVID-19 outbreak.

Major Rating Factors

Strengths

• Demand risk mitigated by PPA terms;