Friday, Jan 24, 2003
MARC affirms Kuching Port Authority’s (KPA) Islamic debt rating of AA+(s)ID (Double A plus, Islamic Debt). The rating reflects the strength of the support provided by the State Government of Sarawak (vide its Letter of Support dated 30 November 2001) in ensuring the timely and full redemption of the notes under the said facility.
Kuching Port is currently the Sarawak state’s premier port serving and supporting the state’s economy. The port’s activities are, thus, very much dependent on the economic condition of the state and to some extent the global economy. Sarawak has a strong and diverse economy; its growth rates have been consistently above the country’s. Its strong financial performance is supported by substantial operating surpluses and manageable fiscal deficits. The state also has relatively low, although rising, level of debt and contingent liabilities.
The port’s two terminals, namely, Pending and Senari terminals are located close to several light industrial zones; facilitating the easier movement of cargo. The Pending terminal handles the conventional and ro-ro (motor vehicle) businesses, whilst the container business is routed through the Senari terminal.
Kuching Port registered at ninth place in terms of cargo throughput at Malaysian Ports in the year 2001, contributing to about 2.5% of the total national cargo throughput. About 50% of KPA’s revenue in 2001 was generated by its container trade, followed by 25% from the break bulk business. Although there was a slight fall in revenue from the containerized cargo, other businesses ie liquid bulk and ro-ro reported substantial increase in revenue for the year.
Kuching Port’s slightly shallower draft compared to certain other federal and state ports in Malaysia places the port at a competitive disadvantage by discouraging larger ships from calling at the port. KPA’s tariffs remained higher than the other state ports, due to its location and distance from the main hub ports in West Malaysia. Productivity levels, nonetheless, have improved with the introduction of gantry cranes at the Senari terminal. The average ship turnaround time continued to improve to 15.6 hours from 17.6 hours previously (from January to September 2002) The average moves per hour (mph) has also improved to 20.7 mph from 19 mph, although still short of the 22 mph planned and the international standard of 25 mph.
For financial year ended December 2001, KPA posted a pre-tax loss of RM10.03 million compared to a pre-tax loss of RM8.47 million previously. This was achieved on the back of a 30% reduction in revenue to RM49.91 million from RM51.49 million in FY2000. Despite recording a profit of RM6.3 million at the operating level, KPA’s high financing cost of RM22.9 million for FY2001 dragged the company into negative position. Through the refinancing of the existing commercial loans of RM128.8 million with the cheaper source of financing i.e BaIDS, the post-tax loss position is expected to be narrowed gradually but KPA is not expected to turnaround until FY2005. KPA’s debt leverage more than doubled to 11.6 times in FY2001 (2000: 5.48 times) upon the issuance of the BaIDS. The repayment of the commercial loans of RM128.8 million by end FY2002 will improve KPA’s debt-equity ratio to around 6.00 times.
KPA may require additional capital grants or any other form of support from the state government to keep the port’s cash flow afloat over the tenure of the bond issue. Noteholders’ interests are, nevertheless, protected through the availability of liquidity/credit support in the transaction structure in the form of revolving credit/overdraft facilities (RC/OD) of an aggregate amount of RM27 million and support from the state government. The RC/OD facilities shall be drawndown to cover any shortfall in funds for the purpose of meeting the redemption of either primary or secondary notes. If the credit facilities have been fully utilized, the state government shall be notified for the necessary arrangements to be made to facilitate the timely and full redemption of the notes under the Islamic debt facility.
Kuching Port is currently the Sarawak state’s premier port serving and supporting the state’s economy. The port’s activities are, thus, very much dependent on the economic condition of the state and to some extent the global economy. Sarawak has a strong and diverse economy; its growth rates have been consistently above the country’s. Its strong financial performance is supported by substantial operating surpluses and manageable fiscal deficits. The state also has relatively low, although rising, level of debt and contingent liabilities.
The port’s two terminals, namely, Pending and Senari terminals are located close to several light industrial zones; facilitating the easier movement of cargo. The Pending terminal handles the conventional and ro-ro (motor vehicle) businesses, whilst the container business is routed through the Senari terminal.
Kuching Port registered at ninth place in terms of cargo throughput at Malaysian Ports in the year 2001, contributing to about 2.5% of the total national cargo throughput. About 50% of KPA’s revenue in 2001 was generated by its container trade, followed by 25% from the break bulk business. Although there was a slight fall in revenue from the containerized cargo, other businesses ie liquid bulk and ro-ro reported substantial increase in revenue for the year.
Kuching Port’s slightly shallower draft compared to certain other federal and state ports in Malaysia places the port at a competitive disadvantage by discouraging larger ships from calling at the port. KPA’s tariffs remained higher than the other state ports, due to its location and distance from the main hub ports in West Malaysia. Productivity levels, nonetheless, have improved with the introduction of gantry cranes at the Senari terminal. The average ship turnaround time continued to improve to 15.6 hours from 17.6 hours previously (from January to September 2002) The average moves per hour (mph) has also improved to 20.7 mph from 19 mph, although still short of the 22 mph planned and the international standard of 25 mph.
For financial year ended December 2001, KPA posted a pre-tax loss of RM10.03 million compared to a pre-tax loss of RM8.47 million previously. This was achieved on the back of a 30% reduction in revenue to RM49.91 million from RM51.49 million in FY2000. Despite recording a profit of RM6.3 million at the operating level, KPA’s high financing cost of RM22.9 million for FY2001 dragged the company into negative position. Through the refinancing of the existing commercial loans of RM128.8 million with the cheaper source of financing i.e BaIDS, the post-tax loss position is expected to be narrowed gradually but KPA is not expected to turnaround until FY2005. KPA’s debt leverage more than doubled to 11.6 times in FY2001 (2000: 5.48 times) upon the issuance of the BaIDS. The repayment of the commercial loans of RM128.8 million by end FY2002 will improve KPA’s debt-equity ratio to around 6.00 times.
KPA may require additional capital grants or any other form of support from the state government to keep the port’s cash flow afloat over the tenure of the bond issue. Noteholders’ interests are, nevertheless, protected through the availability of liquidity/credit support in the transaction structure in the form of revolving credit/overdraft facilities (RC/OD) of an aggregate amount of RM27 million and support from the state government. The RC/OD facilities shall be drawndown to cover any shortfall in funds for the purpose of meeting the redemption of either primary or secondary notes. If the credit facilities have been fully utilized, the state government shall be notified for the necessary arrangements to be made to facilitate the timely and full redemption of the notes under the Islamic debt facility.