Thursday, Apr 03, 2008
MARC has reaffirmed the AAAID long-term rating of Gas District Cooling (Putrajaya) Sdn Bhd’s (“GDC Putrajaya”) RM300 million Al-Bai’ Bithaman Ajil Islamic Debt Securities (“BaIDS”). The rating carries a stable outlook. GDC Putrajaya operates and maintains district cooling plants in Putrajaya, the Federal Administrative Capital of Malaysia.
The affirmed rating reflects GDC Putrajaya’s position as sole supplier of chilled water to all government premises in Putrajaya, the relatively low operating risk associated with district cooling facilities, a 22-year offtake agreement with the Government of Malaysia (GOM) and the superior credit quality of its offtakers. The rating also reflects the significant level of financial support provided by GDC Putrajaya’s ultimate parent, Petroliam Nasional Berhad (PETRONAS), by way of advances and capital contributions. This credit support underpins GDC Putrajaya’s continued compliance with its financial covenants under the BaIDS and mitigates its continuing weak financial performance measures.
GDC Putrajaya currently operates four main plants namely Plant 1, Plant 2, Wisma Putra plant and the Convention Centre plant. The total contractual peak demand for FY2007 has increased to 56,576 Refrigeration Tonnage (“RT”) (FY2006: 53,581RT) with the addition of new offtakers, a government ministry and Putrajaya Holdings. Plant 1 achieved a lower load factor of 30.9% in FY2007 (FY2006: 37.8%) due to changes in available capacity throughout the year and lower total consumption from the government buildings. Plant 2’s load factor improved to 23.8% (FY2006: 19.7%) during the year from increased available capacity and higher chilled water offtake from the customers. The Wisma Putra plant, which supplies chilled water to the Foreign Ministry, reported a decline in the load factor to 13.4% in FY2007 from 15.9% in FY2006. The load factor of the Convention Centre plant registered a marginal improvement to 21.9% in FY2007. The low load factor for the plants implies significant under utilisation of the plants. Year-on-year growth in offtake from the Federal Government and Putrajaya Holdings Sdn Bhd has been relatively subdued over the past five years.
GDC Putrajaya posted a marginal growth of 0.4% in its revenue in FY2007. Operating profit however, declined by 60.2% due to higher operating costs which rose by more than threefold than last year, mainly due to increases in administration expenses and the costs of outsourced operations. Despite its continued pre-tax losses which are partly attributed to high depreciation charges, GDC Putrajaya has been generating positive cash flow from operations (CFO). It generated a net CFO of RM55.4 million and a CFO interest coverage of 3.1 times in FY2007 (FY2006: 1.1 times). GDC Putrajaya continues to be in compliance with its minimum required finance service coverage ratio of 1.1 times under the BaIDS. MARC expects GDC Putrajaya’s financial profile to improve in coming years with the modest levels of planned capital expenditure after FY2008 and in line with projected growth in chilled water offtake.
The stable outlook reflects MARC’s view that structural protections, particularly the financial covenants under the BaIDS, and forthcoming timely as well as adequate capital support from GDC Putrajaya’s shareholders will continue to insulate BaIDS holders against uncertain cashflows.
3 April 2008
The affirmed rating reflects GDC Putrajaya’s position as sole supplier of chilled water to all government premises in Putrajaya, the relatively low operating risk associated with district cooling facilities, a 22-year offtake agreement with the Government of Malaysia (GOM) and the superior credit quality of its offtakers. The rating also reflects the significant level of financial support provided by GDC Putrajaya’s ultimate parent, Petroliam Nasional Berhad (PETRONAS), by way of advances and capital contributions. This credit support underpins GDC Putrajaya’s continued compliance with its financial covenants under the BaIDS and mitigates its continuing weak financial performance measures.
GDC Putrajaya currently operates four main plants namely Plant 1, Plant 2, Wisma Putra plant and the Convention Centre plant. The total contractual peak demand for FY2007 has increased to 56,576 Refrigeration Tonnage (“RT”) (FY2006: 53,581RT) with the addition of new offtakers, a government ministry and Putrajaya Holdings. Plant 1 achieved a lower load factor of 30.9% in FY2007 (FY2006: 37.8%) due to changes in available capacity throughout the year and lower total consumption from the government buildings. Plant 2’s load factor improved to 23.8% (FY2006: 19.7%) during the year from increased available capacity and higher chilled water offtake from the customers. The Wisma Putra plant, which supplies chilled water to the Foreign Ministry, reported a decline in the load factor to 13.4% in FY2007 from 15.9% in FY2006. The load factor of the Convention Centre plant registered a marginal improvement to 21.9% in FY2007. The low load factor for the plants implies significant under utilisation of the plants. Year-on-year growth in offtake from the Federal Government and Putrajaya Holdings Sdn Bhd has been relatively subdued over the past five years.
GDC Putrajaya posted a marginal growth of 0.4% in its revenue in FY2007. Operating profit however, declined by 60.2% due to higher operating costs which rose by more than threefold than last year, mainly due to increases in administration expenses and the costs of outsourced operations. Despite its continued pre-tax losses which are partly attributed to high depreciation charges, GDC Putrajaya has been generating positive cash flow from operations (CFO). It generated a net CFO of RM55.4 million and a CFO interest coverage of 3.1 times in FY2007 (FY2006: 1.1 times). GDC Putrajaya continues to be in compliance with its minimum required finance service coverage ratio of 1.1 times under the BaIDS. MARC expects GDC Putrajaya’s financial profile to improve in coming years with the modest levels of planned capital expenditure after FY2008 and in line with projected growth in chilled water offtake.
The stable outlook reflects MARC’s view that structural protections, particularly the financial covenants under the BaIDS, and forthcoming timely as well as adequate capital support from GDC Putrajaya’s shareholders will continue to insulate BaIDS holders against uncertain cashflows.
3 April 2008