MARC has upgraded the corporate debt rating of Westports Malaysia Sdn Bhd’s (Westports) RM350 million Floating Rate Notes. The rating has been upgraded to AA+ from AA. The rating outlook is stable. The rating upgrade and outlook reflects MARC’s expectations that the port operator will maintain its very strong financial profile with good top-line growth and strong earnings growth. Revenue and earnings growth will be supported by infrastructure additions costing RM380.0 million undertaken in 2007 through 2008, which will boost its handling capacity to 6.0 million TEUs in 2010.

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.

Westports, the nation’s leading private seaport, continues to perform favourably on nearly all metrics (cargo throughput, vessel call activity, productivity). Container and conventional cargo throughput grew at a compounded rate of 16.6% and 4.4% per annum respectively. Westports recorded a 17% increase in vessel call activity in 2006.  Its strategic alliance with Hutchison Port Holdings (HPH), also a substantial shareholder, allows Westports to leverage on HPH’s operational expertise and derive technology transfer benefits, which has contributed to its high productivity measures.  Westports’ ongoing capital expansion programme will bolster its future productivity and competitiveness.

Westports registered strong unaudited results for the first 11 months of FY07, with double digit revenue growth compared to the corresponding period in FY06, in line with the higher cargo volumes handled combined with lower financing costs. Despite ongoing capital spending on port expansion, the Group has gradually reduced its debt leverage to 0.46 times as of November 31, 2007, a level MARC considers as modest. Its outstanding debt has been pared down to RM356.8 million as November 30, 2007 compared to RM516.7 million as of November 30, 2006. Westports’ credit protection measures, which were also bolstered by its improved operating results, showed similar improvement.