MARC Ratings has affirmed its AA-IS rating with a stable outlook on Quantum Solar Park (Semenanjung) Sdn Bhd's (QSP Semenanjung) outstanding RM665.0 million Green Sustainable and Responsible Investment (SRI) Sukuk.
QSP Semenanjung owns and operates three 50MW solar power plants located in Gurun, Kedah; Jasin, Melaka; and Merchang, Terengganu.
The rating is primarily supported by QSP Semenanjung’s diversified portfolio of solar power assets and its long-term power purchase agreements (PPAs) with Tenaga Nasional Berhad (TNB). These 21-year PPAs, expiring in 2039 for the Gurun plant and 2040 for the Jasin and Merchang plants, provide a predictable and stable stream of cash flow. Under the agreements, TNB is committed to purchasing a defined amount of energy from QSP Semenanjung’s three solar photovoltaic (PV) plants at a fixed tariff, effectively shielding the projects from fluctuations in electricity demand and pricing.
MARC noted that the rating is partially moderated by potential risks associated with variations in solar irradiance and possible operational disruptions resulting from unforeseen severe weather events or outages.
In 2024, QSP Semenanjung’s overall energy output was marginally lower, by approximately 1.28%, than the P90 forecast (a level of production expected to be exceeded 90% of the time). While the Gurun and Jasin plants exceeded their P90 estimates by 3.63% and 1.36% respectively in 2024, this was offset by the Merchang plant’s underperformance (-6.54%) due to unusually high levels of flooding in January and December 2024. Despite flood protection measures implemented after the January incident, the December flood level was about 50% higher, affecting 58 of the plant’s 240 string combiner boxes (SCB) and reducing plant availability to 82.4% in December 2024. Temporary repairs were completed within the same month, restoring availability to 99.8% by January 2025. Full rectification, including the replacement of all affected SCB units, was completed by the end of April 2025. The company has since implemented corrective measures, such as raising the SCB mounting structure, to prevent recurrence. Total rectification costs of approximately RM0.9 million and an estimated revenue loss of RM1.5 million are expected to be covered by insurance.
QSP Semenanjung’s revenue saw a slight decrease to RM135.2 million in 2024 (2023: RM135.4 million) due to the lower energy output. Operating cash flow also decreased to RM54.4 million in 2024 (2023: RM100.7 million), primarily due to a one-off payment of RM29.7 million to the engineering, procurement and construction (EPC) contractor related to a variation order, the payment of which was previously delayed. However, QSP Semenanjung maintained healthy liquidity, holding approximately RM104.3 million in cash as of April 15, 2025, which is sufficient to meet its next sukuk obligations of RM49.2 million due in October 2025.
MARC’s rating case projects a finance service coverage ratio averaging 2.25x with a minimum of 1.82x during the period of 2025-2035. The cash flow projections are also assessed to be able to withstand moderate stress scenarios, including a plant availability of 97.6%, a 10% increase in operations and maintenance costs, or electricity generation at P99 estimates over the sukuk tenure.