PSA International’s credit profile is “well-positioned” despite ongoing disruptions and trade volatility, Moody's Investors Service has said in a new report.
The global terminal operator’s credit profile is also said to “remain strong” in what the rating agency described as a “range of throughput scenarios”.
“We expect PSA International's throughput to decline by 3% to 10% in 2020 and subsequently grow by 0% to 10% in 2021 — a wide range reflecting different scenarios and the uncertain global trade environment,” Moody's senior vice president Ray Tay said.
“The company's diversified portfolio, robust financial metrics, measured pace of expansion and excellent liquidity will ensure its strong credit quality remains intact despite the challenges stemming from weak macro-economic and trade environment uncertainty.”
However, Moody’s said that if a recovery in throughput is protracted, it expects PSA International to undertake “defensive actions” to maintain its credit quality, which could include reductions in dividends, capital and operating expenditure.
High level of government support
“Given the critical strategic nature of PSA International's assets to the Singapore economy, a high level of government support should remain forthcoming in times of need, especially as the government has demonstrated willingness to provide support to other state-owned companies in strategic sectors affected by coronavirus disruptions,” Moody’s said.
“Post-coronavirus, PSA International will remain well-positioned even as trade routes go through structural changes, because of its strong competitive position and strategic value to shippers and liners in a fluid trade environment.”
In 2019, PSA International handled a total of 85.2m teu in 2019, which was 5.2% higher than the volumes achieved in the previous year.
PSA terminals outside Singapore handled 48.3m teu, up 8.1% year-on-year as the company was boosted by several overseas acquisitions.
The company made three major terminal acquisitions last year — two in North America and a third in eastern Europe.
It acquired Penn Terminals in Pennsylvania and Halterm Container Terminal in the Port of Halifax — both from Macquarie Infrastructure Partners.
In March, it confirmed that it had agreed to acquire Poland’s largest container terminal —DCT Gdansk — as part of a consortium.
In April this year, PSA International-backed Saudi Global Ports (SGP) announced that it was set to transform Saudi Arabia’s King Abdulaziz Port into a “mega container hub” as part of an SGD 2.6bn ($1.8bn) investment.
Domestically, PSA’s flagship operation in Singapore reported modest year-on-year growth of just 1.6% to 36.9m teu.
