Tuesday, Aug 06, 2002
The rating on Kelang Multi Terminal Sdn Bhd (KMT) reflects strong business fundamentals and operational efficiency, complemented by improving profitability indicators. Offsetting this is the high, albeit moderating, gearing levels.
Incorporated in 1990, KMT is the operator of Westport under the privatization agreement signed with the government in 1994. Located in Port Klang, Westport is a deep water, state-of-the-art port catering to modern fifth generation vessels. Westport handles a mix of container and conventional cargoes with a current capacity of 13 million tonnes per annum for conventional cargo and, depending on installed equipment, up to 2.7 million twenty-foot equivalent units (TEUs) for container cargoes.
KMT is 100% owned by Westport Holdings Sdn Bhd (except for 1 Special Share held by the Ministry of Finance Inc.) which in turn is 42.9% owned by Pembinaan Redzai Sdn Bhd and 31.45% by Hutchison Port Holdings (HPH) via South Port Investment Holdings Limited.
The port industry operational and financial trends in the past have been positive in tandem with the growth in trade volumes. However, the slowdown in the US economy coupled with the Sept 11 incident has changed the global growth scenario. Despite this phenomenon, Westport continues to report outstanding growth in container volume since its commencement in 1995. In addition, the government’s drive to promote the use of Port Klang has contributed positively to the growth of Westport’s container and conventional businesses, with revenues increasing by 42% and 16% respectively in 2001.
Westport’s 15-metre deep draft at its approach channel and depth alongside provide the port the competitive edge compared to other ports in Malaysia whereby larger vessels such as the Super Post Panamaxes are able to berth at its terminal. The port also has the competitive edge in terms of storage capacity and its location – close to the main entry/exit point (Pintu Gedung) - which enables more efficient ships’ turnaround time. In addition, the availability of a large storage area is an added advantage for Westport.
Westport enjoys the support from big shipping names such as Evergreen, Maersk Sealand, Hanjin and CMA, which forms the bulk of the port’s revenue over the years. Nonetheless, being a relatively new player in the industry, KMT has a high dependency risk on the above clients given that demand is primarily supported by them.
Strong operating fundamentals were mainly attributed to the port’s good productivity measures in terms of moves per hour, turnaround time, yard management and ancillary services provided. In its bid to become a transhipment megahub, the port has thus far achieved many “Fastport” standards in line with its operating philosophy.
The positive growth in trade volumes in the past years coupled with the port’s capacity and its efficient, state-of-the-art facilities have contributed positively to KMT’s profitability measures since commencement. Except for FY98, KMT’s profitability measures have been on an increasing trend with operating profit (OPBIT) margin at above 30% since 1997. KMT’s results in FY98 dipped into the red due to the surge in interest expense and a huge drop in conventional cargo volume as the economy contracted.
KMT’s cash flow protection measures have strengthened over the past two fiscal years, underpinned by the growth in revenue and reduction in financing cost. Cash flow coverage of gross interest rose to 2.95x and 3.60x in FY2000 and FY2001 respectively (FY99: 1.53x). Debt leverage remains high, albeit a substantial improvement to 3.97x in FY2001 from its peak of 11.79x in FY99. MARC expects the company’s financial performance to improve gradually given the expected improvement in the economy over the medium term.
Financial flexibility is available in the form of working capital lines i.e. overdrafts amounting to RM95 million and government soft loan of RM79 million as at May 2002. The 31.45% shareholding by Hutchison Group is also viewed positively.
Incorporated in 1990, KMT is the operator of Westport under the privatization agreement signed with the government in 1994. Located in Port Klang, Westport is a deep water, state-of-the-art port catering to modern fifth generation vessels. Westport handles a mix of container and conventional cargoes with a current capacity of 13 million tonnes per annum for conventional cargo and, depending on installed equipment, up to 2.7 million twenty-foot equivalent units (TEUs) for container cargoes.
KMT is 100% owned by Westport Holdings Sdn Bhd (except for 1 Special Share held by the Ministry of Finance Inc.) which in turn is 42.9% owned by Pembinaan Redzai Sdn Bhd and 31.45% by Hutchison Port Holdings (HPH) via South Port Investment Holdings Limited.
The port industry operational and financial trends in the past have been positive in tandem with the growth in trade volumes. However, the slowdown in the US economy coupled with the Sept 11 incident has changed the global growth scenario. Despite this phenomenon, Westport continues to report outstanding growth in container volume since its commencement in 1995. In addition, the government’s drive to promote the use of Port Klang has contributed positively to the growth of Westport’s container and conventional businesses, with revenues increasing by 42% and 16% respectively in 2001.
Westport’s 15-metre deep draft at its approach channel and depth alongside provide the port the competitive edge compared to other ports in Malaysia whereby larger vessels such as the Super Post Panamaxes are able to berth at its terminal. The port also has the competitive edge in terms of storage capacity and its location – close to the main entry/exit point (Pintu Gedung) - which enables more efficient ships’ turnaround time. In addition, the availability of a large storage area is an added advantage for Westport.
Westport enjoys the support from big shipping names such as Evergreen, Maersk Sealand, Hanjin and CMA, which forms the bulk of the port’s revenue over the years. Nonetheless, being a relatively new player in the industry, KMT has a high dependency risk on the above clients given that demand is primarily supported by them.
Strong operating fundamentals were mainly attributed to the port’s good productivity measures in terms of moves per hour, turnaround time, yard management and ancillary services provided. In its bid to become a transhipment megahub, the port has thus far achieved many “Fastport” standards in line with its operating philosophy.
The positive growth in trade volumes in the past years coupled with the port’s capacity and its efficient, state-of-the-art facilities have contributed positively to KMT’s profitability measures since commencement. Except for FY98, KMT’s profitability measures have been on an increasing trend with operating profit (OPBIT) margin at above 30% since 1997. KMT’s results in FY98 dipped into the red due to the surge in interest expense and a huge drop in conventional cargo volume as the economy contracted.
KMT’s cash flow protection measures have strengthened over the past two fiscal years, underpinned by the growth in revenue and reduction in financing cost. Cash flow coverage of gross interest rose to 2.95x and 3.60x in FY2000 and FY2001 respectively (FY99: 1.53x). Debt leverage remains high, albeit a substantial improvement to 3.97x in FY2001 from its peak of 11.79x in FY99. MARC expects the company’s financial performance to improve gradually given the expected improvement in the economy over the medium term.
Financial flexibility is available in the form of working capital lines i.e. overdrafts amounting to RM95 million and government soft loan of RM79 million as at May 2002. The 31.45% shareholding by Hutchison Group is also viewed positively.