RAM Ratings has affirmed the AAA/Stable rating of Westports Malaysia Sdn Bhd's (Westports or the Company) RM2.0 bil Sukuk Musharakah Programme (2011/2031). 

In July 2023, Westports obtained the Government of Malaysia Cabinet's approval for its planned expansion under Westports 2.0 which will entail the development of eight new container terminals. While this will activate the Company into a capital spending ramp-up mode and higher debt, its financial ratios are expected to hold up over the coming two years. 

The rating reflects the Company's critical function as the operator of Malaysia's largest container handling terminal and a key transhipment hub in the region (the Port) as well as its robust operational performance and robust financial metrics. Its strategic location along the Straits of Malacca  one of the world's busiest shipping routes is a key competitive edge. Westports' concession under its Privatisation Agreement (PA) with the Port Klang Authority and the Government of Malaysia runs up to 2054.

Westports' performance remained resilient, with a slight decline in container throughput in 2022 but a 7.2% y-o-y volume growth in 9M FY Dec 2023. The Company maintained stable financial metrics during the review period, supported by a favourable tariff structure and prudent cost management, with superior debt coverage indicators. 

Westports 2.0 will double the Port's container handling capacity over the next three decades. Including capital expenditure required for the port expansion, RM5.0 bil will be allocated to be utilised between 2024 and 2028, and will be funded by a mix of debt, internal funds, and equity. Depending on the pace of its capital spending, the forecasted increase in debt could pressure Westports' financial profile and reduce rating headroom. Accordingly, the Company will have to continue its cautious approach to debt management and exercise financial flexibility as and when required. In the near term, however, we anticipate its de