Tuesday, Jan 20, 2004
MARC has reaffirmed Petronas Gas Berhad’s (PGB) issuer rating at MARC-1/AAA, its RM900 million Murabahah Commercial Paper/Medium Term Notes Programmes (1999/2004) (MUNIF) ratings at MARC-1/AAAID (Islamic Debt), and RM500 million Al-Bai Bithaman Ajil Bonds Issuance Facility (1999/2004) (ABBA) rating at AAAID (Islamic Debt).
The reaffirmation of the ratings are supported by the company’s dominant position in the gas processing and transmission business; stability of earnings afforded by a long-term Gas Processing and Transmission Agreement (GPTA) with PETRONAS; supplementary earnings from the Centralized Utility Facilities (CUF); low commodity risk; efficient operations; and a strong financial profile.
PGB operates as a throughput service company; processing natural gas supplied by the gas fields offshore Terengganu and transmitting the processed gas to end-users on behalf of its parent company, PETRONAS. Throughput fees in respect of the services rendered, continued to form PGB’s main source of income, accounting for 80% of total revenue in FYE3/03. The major consumers of PGB’s drygas are the power producers. The long term nature of gas supply contracts with electricity producers coupled with the ‘take or pay’ arrangement on quantity supplied, lend stability to demand for drygas from this sector.
The balance 20% of revenue was contributed by the sale of industrial utilities, via the CUFs, to various petrochemical plants in Kerteh and Gebeng. Demand for such utilities is expected to increase in tandem with the projected growth in customers’ demand. Operating profit margin hovered around 38% for the second consecutive year. On the back of the 15% increase in revenue, PGB’s pre-tax profit surged by 29% to RM779.1 million in FYE3/03.
Debt servicing capacity remains strong, underpinned by the stable and predictable cash flow. Stability of the cash flow stems from the throughput fee structure, as well as the superior credit quality of the off-taker, PETRONAS (rated AAA). PGB’s debt leverage position is moderate, averaging at 0.5 times over the past five fiscal years. And with total liquid assets (cash and cash equivalents) of RM327.8 million as at 30 June 2003 and the backing of PETRONAS, PGB’s financial flexibility is considered strong.
The reaffirmation of the ratings are supported by the company’s dominant position in the gas processing and transmission business; stability of earnings afforded by a long-term Gas Processing and Transmission Agreement (GPTA) with PETRONAS; supplementary earnings from the Centralized Utility Facilities (CUF); low commodity risk; efficient operations; and a strong financial profile.
PGB operates as a throughput service company; processing natural gas supplied by the gas fields offshore Terengganu and transmitting the processed gas to end-users on behalf of its parent company, PETRONAS. Throughput fees in respect of the services rendered, continued to form PGB’s main source of income, accounting for 80% of total revenue in FYE3/03. The major consumers of PGB’s drygas are the power producers. The long term nature of gas supply contracts with electricity producers coupled with the ‘take or pay’ arrangement on quantity supplied, lend stability to demand for drygas from this sector.
The balance 20% of revenue was contributed by the sale of industrial utilities, via the CUFs, to various petrochemical plants in Kerteh and Gebeng. Demand for such utilities is expected to increase in tandem with the projected growth in customers’ demand. Operating profit margin hovered around 38% for the second consecutive year. On the back of the 15% increase in revenue, PGB’s pre-tax profit surged by 29% to RM779.1 million in FYE3/03.
Debt servicing capacity remains strong, underpinned by the stable and predictable cash flow. Stability of the cash flow stems from the throughput fee structure, as well as the superior credit quality of the off-taker, PETRONAS (rated AAA). PGB’s debt leverage position is moderate, averaging at 0.5 times over the past five fiscal years. And with total liquid assets (cash and cash equivalents) of RM327.8 million as at 30 June 2003 and the backing of PETRONAS, PGB’s financial flexibility is considered strong.