San Miguel-led SMC Tollways Corporation is planning to raise up to P35 billion from a proposed bond issuance to fund and support the continued expansion and operation of the Skyway System.
Philippine Rating Services Corporation (PhilRatings) said it has assigned SMC Tollways’ planned issuance worth P30 billion with an Oversubscription Option of up to P5 billion, the highest issue credit rating of PRS Aaa, with a stable outlook.
Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment to the obligation is extremely strong.
A stable outlook, on the other hand, indicates that the assigned rating is likely to be maintained or to remain unchanged in the next 12 months.
PhilRatings said it took into account major rating factors in assigning the rating and corresponding Outlook including the firm’s being part of the established San Miguel Group, under its infrastructure arm – San Miguel Holdings Corporation.
Other factors taken into consideration include the positive demand for the services of SMC Tollways, its sustained improvement in profitability, and easing leverage levels.
SMC Tollways holds the concession rights for the Skyway System consisting of the Skyway Stage 1, Skyway Stage 2, Skyway Stage 3 and the Skyway Extension.
SMC Infrastructure also oversees other major expressways in Luzon, such as the South Luzon Expressway (SLEX), Southern Tagalog Arterial Road (STAR), Tarlac-Pangasinan-La Union Expressway (TPLEX), and the NAIA Expressway (NAIAx).
PhilRatings noted that “since the outbreak of the pandemic in 2020, the annual average daily traffic (AADT) in the Skyway System progressively increased. As of end-2023, the total AADT in Skyway Stage 1 and Skyway Stage 2 already surpassed its 2019 AADT by six percent.”
On the other hand, the AADT of Skyway Stage 3 sustained an uptrend since its public opening in July 2021, and posted increases of 51.4 percent as of end-2022 and 27.9 percent as of end-2023.
In the first half of 2024, overall AADT for the whole Skyway System grew by 2.8 percent since end-2023.
Demand for the expressway is seen to be resilient with a healthy projected growth in overall AADT moving forward.
Supported by the recovery and growth in AADT, consolidated revenues of SMC Tollways and its subsidiaries rose by 62 percent to P17 billion in 2022 and by 19 percent to P20.3 billion in 2023.
Net income likewise registered substantial growth, as continued improvement in revenues was complemented with well-managed costs and expenses.
Bottom line expanded from P1.6 billion in 2021 to P5.6 billion in 2022, and further to P8.4 billion in 2023. An increasing trend in net profit margin was also observed, with such climbing from 16 percent in 2021 to 33 percent in 2022 and 41 percent in 2023.
Returns exhibited the same uptrend, and debt service coverage ratio (DSCR) was adequate throughout the three-year period.
Growth in both earnings and margins was also sustained in the first half of 2024. Net income amounted to P4.8 billion, up by 21 percent from P4 billion in the same period last year.
Gross margin inched up from 71 percent in the first semester of 2023 to 72 percent in the same period of 2024, and net profit margin went up from 40 percent to 46 percent.
Going forward, SMC Tollways anticipates steady profitability supporting solid cash generation and healthy liquidity.