[RAM] RAM Ratings upgrades Samalaju's Sukuk rating to AAA(s); outlook revised to stable

RAM Ratings has upgraded Samalaju Industrial Port Sdn Bhd’s (Samalaju or the Company) rating from AA₁/positive(s) to AAA(s)/stable for its RM950 mil Sukuk Murabahah Programme (2015/2036) (the Sukuk). The (s) modifier indicates the rating enhancement provided by the corporate guarantee extended by its parent company, Bintulu Port Holdings Berhad (BPHB or the Group, rated AAA/Stable/P1). We have concurrently revised the outlook on the long-term rating to stable from positive.

This rating action reflects RAM’s anticipated stronger government support and improved business conditions for the Group, resulting from Bintulu Port and Samalaju Port being identified as strategic to the Sarawak State Government’s (the State) growth plans, with port assets being placed under a centralised Sarawak port authority. Bintulu Port is the nation’s largest LNG port, whilst Samalaju Port serves as a dedicated port and logistical hub for tenants of Samalaju Industrial Park (SIP or the Park), which forms a major component of the broader Sarawak Corridor of Renewable Energy (SCORE).

With Bintulu port officially returning to state control, there are greater port integrations with other state ports like Samalaju, as well as aligning to the State’s green economic goals. This transition aims to streamline operations and strengthen Sarawak’s trade capabilities. Based on RAM’s Government-Linked Entity-support assessment, we view the likelihood of extraordinary support from the federal and Sarawak state governments to be ‘very high’, providing an uplift to the ratings. 
 
On a standalone basis, low utilisation rates, high capex costs and weak profitability continue to constrain any meaningful improvements in Samalaju’s credit profile. Throughput handled at the Port slipped to 5.95 mil tonnes (-11.6% y-o-y) in fiscal 2023 due to slower commodities restocking activities of the Park’s seven key occupants, underlining Samalaju’s concentration risks. The Port’s largest customer Press Metal Bintulu Sdn Bhd’s (Press Metal) contributed nearly half of the Company’s throughput and revenue in fiscal 2023. Any significant change in the business and/or financial profiles of its customers may affect the Company’s performance, although this risk is moderated by the tenants’ significant investments in establishing facilities at the Park.

Despite marginal increases in annual revenue and earnings, Samalaju continues to register elevated leverage and debt coverage ratios due to its low-capacity utilisation and weak profitability. In the near term, we expect adjusted funds from operations debt coverage to remain weak at an average 0.06 times while adjusted gearing hovers between 1.18 times and 1.36 times. With around RM335.33 million in cash reserves, the Company can comfortably cover its principal and profit payments due in the next 12 months. The long remaining concession tenure under Samalaju’s Privatisation Agreement provides the Company with sufficient headroom to allow for a refinancing of the Sukuk. 


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

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