Wednesday, Dec 29, 2004
MARC has reaffirmed the rating of MTD Prime Sdn Bhd’s (MTD Prime) Al-Bai Bithaman Ajil Islamic Debt Securities (BAIDS) rating at AA-ID. This reflects the continuous traffic growth at the KL – Karak Highway being above the Government’s guaranteed traffic volume; and the strength of the company’s financial profile underpinned by the strong revenue growth.
MTD Prime is the concession holder of the KL – Karak Highway. In July 2002, the Government announced a revision to the toll rates at both the Gombak and Bentong toll plazas. The new toll rates were, however, lower than the rates agreed upon under the Supplemental Concession Agreement. To compensate MTD Prime for the expected loss of earnings for the remainder of the concession period, the Government proposed an extension of the concession period for a further six years, up to 2032; waiver of the government support loan amounting to RM202.9 million; awarding the right of toll collection and maintenance of the East Coast Expressway (ECE) Phase 1 for 28 years from the year 2005; and payment of cash compensation totalling RM97.1 million.
Although traffic growth slowed down to 2.6% in 2003 (2002: 7.0%), the actual traffic volume was still comfortably above the Support Traffic Volume level of 21.1 million pcu (2002: 20.1 million pcu). For the remainder of the Facility period, the company projects a traffic growth of 6% per annum. Average traffic growth for the last seven years was 8%.
Although MTD Prime’s overall revenue dropped slightly from the previous year, toll collection revenue actually increased by 13.87% to RM89.52 million in FY2004 on the back of increased traffic. The surge in revenue in FY2003 was mainly due to the receipt of compensation amounting to RM28.5 million, which marked the full receipt of the toll compensation revenue from the Government. Operating profit margin improved to 67.6% mainly due to a reduction in cost of sales and finance cost following the waiver of the government support loan as part of the compensation package. Pre-tax profit consequently, increased to RM40.96 million in FY2004 from RM39.03 million in the previous year. Revenue from toll collection of the completed ECE1 is also expected to contribute towards MTD Prime’s revenue starting from next year.
Cash generated from operations turned deficit as MTD Prime advanced RM227.27 million to its holding company, MTD InfraPerdana Bhd for capital repayment. Ecluding the effect of the outflow, MTD Prime’s CFO interest cover and CFO debt cover was 8.55 times and 2.42 times, respectively. The advance was financed through a drawdown on a term loan (RM50.0 million), cash compensation received from the government (RM97.1 million) and internally generated funds (RM80.17 million).
The company’s debt leverage improved further to 0.76x with the waiver of the Government Support Loan in FY2004. Given the reduced debt leverage during the year and the progressive redemption of the BBA notes, MTD Prime will have the flexibility to obtain further financing going forward.
MTD Prime is the concession holder of the KL – Karak Highway. In July 2002, the Government announced a revision to the toll rates at both the Gombak and Bentong toll plazas. The new toll rates were, however, lower than the rates agreed upon under the Supplemental Concession Agreement. To compensate MTD Prime for the expected loss of earnings for the remainder of the concession period, the Government proposed an extension of the concession period for a further six years, up to 2032; waiver of the government support loan amounting to RM202.9 million; awarding the right of toll collection and maintenance of the East Coast Expressway (ECE) Phase 1 for 28 years from the year 2005; and payment of cash compensation totalling RM97.1 million.
Although traffic growth slowed down to 2.6% in 2003 (2002: 7.0%), the actual traffic volume was still comfortably above the Support Traffic Volume level of 21.1 million pcu (2002: 20.1 million pcu). For the remainder of the Facility period, the company projects a traffic growth of 6% per annum. Average traffic growth for the last seven years was 8%.
Although MTD Prime’s overall revenue dropped slightly from the previous year, toll collection revenue actually increased by 13.87% to RM89.52 million in FY2004 on the back of increased traffic. The surge in revenue in FY2003 was mainly due to the receipt of compensation amounting to RM28.5 million, which marked the full receipt of the toll compensation revenue from the Government. Operating profit margin improved to 67.6% mainly due to a reduction in cost of sales and finance cost following the waiver of the government support loan as part of the compensation package. Pre-tax profit consequently, increased to RM40.96 million in FY2004 from RM39.03 million in the previous year. Revenue from toll collection of the completed ECE1 is also expected to contribute towards MTD Prime’s revenue starting from next year.
Cash generated from operations turned deficit as MTD Prime advanced RM227.27 million to its holding company, MTD InfraPerdana Bhd for capital repayment. Ecluding the effect of the outflow, MTD Prime’s CFO interest cover and CFO debt cover was 8.55 times and 2.42 times, respectively. The advance was financed through a drawdown on a term loan (RM50.0 million), cash compensation received from the government (RM97.1 million) and internally generated funds (RM80.17 million).
The company’s debt leverage improved further to 0.76x with the waiver of the Government Support Loan in FY2004. Given the reduced debt leverage during the year and the progressive redemption of the BBA notes, MTD Prime will have the flexibility to obtain further financing going forward.