MARC has revised its outlook on Westports Malaysia Sdn Bhd’s (Westports) AA rating of its RM350 million Floating Rate Notes to positive from stable.  

The outlook revision reflects Westport’s improving financial profile. Westports posted  RM753.0 million revenue for the first 11 months of FY07, up 10.5% from the corresponding period in FY06 in line with the higher cargo volumes handled combined with lower financing costs. MARC understands from management that Group’s capitalization has been strengthened by a 30.9% reduction in its outstanding debt to RM356.8 million (at 30 November 2006: RM516.7 million). Its net gearing moderated to 0.40-0.50 times, from 0.82 times as at 30 November 2006. Westports’ credit protection measures, which were also bolstered by its improved operating results, showed similar improvement. Its operating profit before depreciation interest and tax-to-debt cover rose from 0.63 times to 1.10 times. In February 2007, Westports redeemed Tranche 3 of the FRNs amounting to RM70.0 million as scheduled. The current outstanding balance of the FRNs stands at RM160.0 million.

Westports is one of two port operators in Port Klang. Westports’ competitive advantages over its close rivals include a 15-metre deep draft which can accommodate larger ships such as the super post-panamax vessels, its proximity to road and rail infrastructure, quality information technology (IT) support services, and its productivity.  Westports appears well-positioned to capture part of the region’s growing container transhipment trade, particularly with the growing levels of port congestion faced by some of Westports’ neighbouring ports.