MARC affirms its AAIS rating on ANIH's Rm2.5 Billion Senior Sukuk Musharakah Programme

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1. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications MARC​ ​affirms​ ​its​ ​AAIS​ ​rating​ ​on​ ​ANIH's Rm2.5​ ​Billion​ ​Senior​ ​Sukuk​ ​Musharakah Programme 30​ ​November​ ​2017 MARC​ ​has​ ​affirmed​ ​its​ ​AAIS​ ​rating​ ​on​ ​ANIH​ ​Berhad's​ ​(ANIH)​ ​RM2.5​ ​billion​ ​Senior​ ​Sukuk Musharakah​ ​Programme​ ​with​ ​a​ ​stable​ ​outlook.​ ​ANIH​ ​is​ ​the​ ​concessionaire​ ​of​ ​Kuala Lumpur-Karak​ ​Highway​ ​(KL-Karak)​ ​and​ ​Phase​ ​1​ ​of​ ​East​ ​Coast​ ​Expressway​ ​(ECE1)​ ​until​ ​2032 as​ ​well​ ​as​ ​Kuala​ ​Lumpur-Seremban​ ​Expressway​ ​(KL-Seremban)​ ​until​ ​2018. The​ ​rating​ ​considers​ ​the​ ​stable​ ​traffic​ ​performance​ ​on​ ​ANIH's​ ​concession​ ​assets​ ​which​ ​supports sufficient​ ​cash​ ​flow​ ​generation​ ​to​ ​meet​ ​the​ ​concessionaire's​ ​finance​ ​service​ ​obligations.​ ​The rating​ ​also​ ​benefits​ ​from​ ​the​ ​subordinated​ ​and​ ​equity-like​ ​features​ ​of​ ​ANIH's​ ​RM620​ ​million Junior​ ​Bonds​ ​that​ ​allow​ ​it​ ​to​ ​withstand​ ​moderate​ ​operational​ ​underperformance.​ ​The​ ​rating​ ​is constrained​ ​by​ ​ANIH's​ ​highly​ ​leveraged​ ​capital​ ​structure​ ​and​ ​its​ ​heavy​ ​reliance​ ​on​ ​toll​ ​rate​ ​hikes to​ ​maintain​ ​its​ ​financial​ ​metrics. For​ ​financial​ ​year​ ​ended​ ​March​ ​31,​ ​2017​ ​(FY2017),​ ​the​ ​overall​ ​traffic​ ​volume​ ​of​ ​the​ ​highways was​ ​within​ ​traffic​ ​forecast​ ​as​ ​per​ ​a​ ​traffic​ ​consultant​ ​study​ ​carried​ ​out​ ​in​ ​2011.​ ​The​ ​traffic​ ​volume was​ ​supported​ ​by​ ​a​ ​2.7%​ ​growth​ ​on​ ​KL-Karak​ ​to​ ​119,774​ ​passenger​ ​car​ ​units​ ​per​ ​day (pcu/day).​ ​Traffic​ ​on​ ​the​ ​highway​ ​was​ ​further​ ​bolstered​ ​by​ ​the​ ​opening​ ​of​ ​the​ ​Genting​ ​Highlands Premium​ ​Outlets​ ​in​ ​June​ ​2017​ ​and​ ​registered​ ​a​ ​6.0%​ ​growth​ ​y-o-y​ ​in​ ​the​ ​first​ ​quarter​ ​of​ ​FY2018 (1QFY2018).​ ​On​ ​ECE1​ ​and​ ​KL-Seremban,​ ​traffic​ ​volume​ ​was​ ​generally​ ​flat​ ​in​ ​FY2017.​ ​The subdued​ ​performance​ ​on​ ​ECE1​ ​was​ ​partly​ ​attributed​ ​to​ ​commencement​ ​of​ ​tolling​ ​in​ ​July​ ​2016 on​ ​ECE2,​ ​which​ ​is​ ​directly​ ​connected​ ​to​ ​ECE1.​ ​In​ ​FY2017,​ ​traffic​ ​volume​ ​on​ ​ECE1​ ​and KL-Seremban​ ​stood​ ​at​ ​22,334​ ​pcu/km/day​ ​and​ ​139,744​ ​pcu/day​ ​respectively. ANIH's​ ​toll​ ​revenue​ ​increased​ ​marginally​ ​y-o-y​ ​to​ ​RM466.8​ ​million​ ​and​ ​remains​ ​comparable​ ​to FY2017's​ ​projected​ ​revenue​ ​of​ ​RM450.5​ ​million.​ ​This​ ​notwithstanding,​ ​the​ ​concessionaire registered​ ​losses​ ​before​ ​tax​ ​of​ ​RM77.1​ ​million​ ​on​ ​the​ ​back​ ​of​ ​the​ ​adoption​ ​of​ ​new​ ​accounting standards​ ​which​ ​resulted​ ​in​ ​higher​ ​amortisation​ ​charges​ ​of​ ​RM191.6​ ​million​ ​(FY2016:​ ​RM101.7 million).​ ​The​ ​company's​ ​operating​ ​cash​ ​flow​ ​rose​ ​19.2%​ ​y-o-y​ ​to​ ​RM265.1​ ​million,​ ​resulting​ ​in​ ​an increased​ ​cash​ ​balance​ ​to​ ​RM379.8​ ​million​ ​as​ ​at​ ​end-FY2017.​ ​Its​ ​debt​ ​servicing​ ​capacity remains​ ​adequate​ ​with​ ​a​ ​forward-looking​ ​finance​ ​service​ ​coverage​ ​ratio​ ​(FSCR)​ ​of​ ​2.81​ ​times​ ​in FY2017​ ​vis-à-vis​ ​the​ ​covenanted​ ​FSCR​ ​of​ ​1.75​ ​times.
2. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications Under​ ​the​ ​base​ ​case​ ​cash​ ​flow​ ​projections,​ ​ANIH's​ ​average​ ​pre-distribution​ ​FSCR​ ​(with​ ​cash balance)​ ​is​ ​envisaged​ ​to​ ​remain​ ​resilient​ ​at​ ​3.82​ ​times.​ ​MARC's​ ​sensitivity​ ​analysis​ ​reveals​ ​that ANIH's​ ​cash​ ​flows​ ​can​ ​withstand​ ​moderate​ ​traffic​ ​underperformance​ ​provided​ ​that​ ​the​ ​toll​ ​rate hikes​ ​are​ ​implemented​ ​as​ ​per​ ​the​ ​concession​ ​agreement.​ ​Additionally,​ ​the​ ​coupon​ ​deferral feature​ ​of​ ​ANIH's​ ​Junior​ ​Bonds​ ​that​ ​allows​ ​any​ ​unpaid​ ​coupons​ ​to​ ​be​ ​accumulated​ ​and​ ​paid​ ​on the​ ​maturity​ ​date​ ​of​ ​the​ ​respective​ ​tranche​ ​of​ ​the​ ​bonds​ ​if​ ​the​ ​minimum​ ​post-distribution​ ​FSCR​ ​is not​ ​met,​ ​provides​ ​some​ ​buffer​ ​should​ ​traffic​ ​performance​ ​be​ ​significantly​ ​below​ ​projections. Given​ ​ANIH's​ ​highways'​ ​mature​ ​traffic​ ​profile​ ​and​ ​its​ ​long​ ​operating​ ​history,​ ​the​ ​risk​ ​of​ ​prolonged significant​ ​traffic​ ​underperformance​ ​is​ ​deemed​ ​low. The​ ​outlook​ ​incorporates​ ​MARC's​ ​expectations​ ​that​ ​ANIH​ ​would​ ​maintain​ ​its​ ​credit​ ​profile supported​ ​by​ ​stable​ ​traffic​ ​performance​ ​from​ ​its​ ​toll​ ​concessions.​ ​The​ ​rating​ ​and/or​ ​outlook could​ ​face​ ​downward Organisation​ ​Name: News​ ​Type: Malaysian​ ​Rating​ ​Corporation​ ​Berhad​ ​(MARC) RATING​ ​ANNOUNCEMENT Source: BNM​ ​Announcements Media​ ​Contact ​ ​Adib​ ​Asilah,​ ​+603-2717​ ​2943/​ ​asilah@marc.com.my David​ ​Lee,​ ​+603-2717​ ​2955/​ ​david@marc.com.my Disclaimer: This​ ​communication​ ​is​ ​provided​ ​by​ ​Malaysian​ ​Rating​ ​Corporation Berhad​ ​(MARC)​ ​on​ ​the​ ​basis​ ​of​ ​information​ ​believed​ ​by​ ​MARC​ ​to​ ​be accurate​ ​and​ ​reliable​ ​as​ ​derived​ ​from​ ​publicly​ ​available​ ​sources​ ​or provided​ ​by​ ​the​ ​rated​ ​entity​ ​or​ ​its​ ​agents.​ ​MARC,​ ​however,​ ​has​ ​not independently​ ​verified​ ​such​ ​information​ ​and​ ​makes​ ​no​ ​representation as​ ​to​ ​the​ ​accuracy​ ​or​ ​completeness​ ​of​ ​such​ ​information.​ ​Any assignment​ ​of​ ​a​ ​credit​ ​rating​ ​by​ ​MARC​ ​is​ ​solely​ ​to​ ​be​ ​construed​ ​as​ ​a statement​ ​of​ ​its​ ​opinion​ ​and​ ​not​ ​a​ ​statement​ ​of​ ​fact.​ ​A​ ​credit​ ​rating​ ​is not​ ​a​ ​recommendation​ ​to​ ​buy,​ ​sell,​ ​or​ ​hold​ ​any​ ​security.