[RAM] RAM Ratings upgrades Bintulu Port Holdings to AAA

RAM Ratings has upgraded the corporate credit ratings of Bintulu Port Holdings Berhad’s (BPHB or the Group) to AAA/Stable/P1 from AA₁/Positive/P1.  Bintulu Port Sdn Bhd, a wholly-owned subsidiary of BPHB, operates Bintulu Port, Sarawak’s largest port and Malaysia’s sole liquefied natural gas (LNG) export terminal.

The upgrade reflects anticipated stronger government support and improved business conditions stemming from BPHB’s expanded role in the Sarawak State Government’s (the State) agenda to restructure the port sector for greater competitiveness and efficiency. 

Under RAM’s support assessment for government-linked entities, we anticipate a “very high” likelihood of extraordinary support from both federal and state governments. Since our last review, substantial progress has been made towards the State assuming control of Bintulu Port, with Bintulu Port's transition to State ownership expected by year-end. This follows from Malaysia’s parliamentary approval in July 2024 to repeal the Bintulu Port Authority Act 1981 and dissolve the Bintulu Port Authority (BPA).

Negotiations for a new Port Operation Agreement (POA) for Bintulu Port Sdn Bhd (BPSB), a wholly owned subsidiary of BPHB, are advancing with active involvement from the Group and the State’s Ministry of Infrastructure and Port Development (MIPD). Currently, Bintulu Port operates under an interim arrangement, and the State plans to establish the Sarawak Ports Authority (SARPA) to consolidate oversight across all six state ports.

Looking ahead, Bintulu Port is poised to benefit from improving macroeconomic conditions in Sarawak, with stronger business prospects and operational efficiencies as its strategies increasingly align with the State’s port policies. As the most prominent of Sarawak’s six ports and a crucial hub for imports and exports - especially Liquified Natural Gas (LNG), Bintulu Port will likely capitalise on rising cargo volumes driven by increased economic activity in Bintulu. 

In 2023, BPHB overall cargo throughput declined to 48.77 mil tonnes (2022: 50.72 mil tonnes), impacted by weaker economic activity in China and inventory overstocking and production slowdowns at Samalaju Industrial Park (the Park). However, in 9M 2024, revenue increased by 10.46% y-o-y to RM608.34 mil, driven by increased LNG cargo handling, supply base activities, and improved non-LNG cargoes amid rising activity at the Park. Geopolitical tensions—including the Red-Sea crisis, conflicts in the Middle East, and the Russia-Ukraine war, adverse weather conditions, and brief US port strikes did not affect operations at its ports.

As at end-September 2024, BPHB maintains robust liquidity, with RM1.35 bil in cash and cash equivalents, adequately covering external borrowings of RM927.31 mil and short-term lease liabilities of RM43.21 mil. BPHB’s next sukuk principal repayment of RM100 mil is scheduled for December 2024. We anticipate that its debt coverage and leverage metrics will remain within expected parameters.

BPHB’s credit ratings also consider the ongoing capital expenditures necessary for maintaining competitiveness and operational efficiency. In our assessment, we assume that the renewed concession terms – though still under negotiation – will remain supportive of its stand-alone metrics. Other moderating factors include the cyclicality and uncertainties of the industries it serves, and the risk of Privatisation Agreement’s termination.  Nonetheless, these risks are deemed low.  


Analytical contacts
Zachary Tan
(603) 3385 2612
zachary@ram.com.my

Davinder Kaur Gill
(603) 3385 2525
davinder@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my