[MARC] MARC Ratings affirms Johor Port Berhad’s ratings at MARC-1IS/AA-IS

MARC Ratings has affirmed its ratings on port operator Johor Port Berhad’s (JPB) Islamic Commercial Papers (ICP) and Islamic Medium-Term Notes (IMTN) Programmes at MARC-1IS and AA-IS. The outlook on the long-term rating has been maintained at positive. The programmes have a combined aggregate limit of RM1.0 billion with the current outstanding comprising entirely IMTNs of RM600.0 million.

The ratings continue to be driven by JPB’s strong debt coverage metrics, steady operating cash flow, and prudent financial management. Healthy margins and manageable borrowings have allowed JPB to maintain stable leverage. MARC Ratings also views positively JPB’s established track record in operating Johor Port, a key gateway port in southern Peninsular Malaysia which benefits from resilient trade activity in the region. The positive outlook continues to represent MARC Ratings’ view on JPB’s strengthening financial profile. Nevertheless, the rating agency is cognisant of the port operator’s exposure to geopolitical development which could impact regional and global trade movements.

MARC Ratings understands that in the months following the US tariff imposition announcement in April 2025, JPB saw an uptick in shipments at the port as several exporters in the electrical and electronics (E&E) and furniture segments expedited shipments bound for the US before the tariff’s effective date. However, the longer-term impact remains uncertain. While Johor Port’s exposure to direct US exports is limited, the export of mid-supply chain manufacturing goods through Johor Port remains significant, the demand for which may be affected by the new tariff imposition.

Both container and conventional cargo handling volumes at Johor Port have remained steady; the matured, multi-purpose port handled 0.43 million twenty-foot equivalent units (TEUs) and 7.03 million freight weight tonnes (FWT) during the first five months of 2025 (5M2025). The container segment continued to benefit from robust manufacturing activity in the southern Peninsular Malaysia hinterland, and activities at the Pengerang terminals, while conventional cargo was supported by a 6.0% y-o-y growth in liquid bulk handling, mainly from higher volumes of palm oil and petroleum.

To support growth, JPB completed the construction of two new liquid bulk berths in June 2025, raising capacity to 20.0 million FWT per annum. (2024: 15.0 million FWT). Further expansion includes the construction of a new yard at the container terminal, and the replacement of rubber-tyred gantry cranes and terminal tractors alongside other equipment by 2028. The expansion is aimed at increasing the efficiency of the port’s container terminal, balancing the wharf and yard handling capabilities. These initiatives form part of a RM1.0 billion capex programme through 2029, which also includes planned works to maintain navigational depth and ensure berth accessibility.

A planned RM150.0 million drawdown in 2026 to part-fund capex will increase borrowings to around RM750.0 million, potentially resulting in gross debt-to-equity of 0.61x from 0.49x. Despite the rise, leverage is expected to remain stable, given JPB’s staggered funding approach.

Liquidity remains strong, supported by growing operating cash flow and available headroom under the rated programme. Strong and stable CFO generation translated into interest and debt coverage ratios of 9.74x and 0.44x as at end-May 2025. JPB had RM284.7 million in cash and bank balances. Annual dividends are projected to increase to RM130.0 million (2020–2024 average: RM120.0 million); however, MARC Ratings expects the company to maintain a balanced financial profile. During 5M2025, revenue rose 12.2% y-o-y to RM357.6 million, although operating profit declined to RM145.2 million due to higher costs.

Looking ahead, JPB’s operating performance is expected to remain steady, underpinned by a balanced revenue mix from container, conventional, and marine services. This diversification supports earnings stability and mitigates risks associated with fluctuations in any individual segment.

Vanessa Leong, +603-2717 2931/ xinyue@marc.com.my
Taufiq Kamal, +603-2717 2951/ taufiq@marc.com.my