MARC Affirms Aais Rating on Anih Berhad's RM2.5 Billion Senior Sukuk Musharakah Programme
MARC Affirms Aais Rating on Anih Berhad's RM2.5 Billion Senior Sukuk Musharakah Programme
Ard, Mal, Musharakah
Ard, Mal, Musharakah
Transcription
- 11 /9/2016 Latest Announcement (News ID : 2016110900013) Latest Announcement News ID : 2016110900013 Subject : ANIH BERHAD ANIH BERHAD Organisation Name: MALAYSIAN RATING CORPORATION News Type: RATING ANNOUNCEMENT Reference Site: None Embargo Date: 09/11/2016 Embargo Time: 03:20 PM Expiry Date: 23/11/2016 Priority: Medium Summary: MARC AFFIRMS AAIS RATING ON ANIH BERHAD'S RM2.5 BILLION SENIOR SUKUK MUSHARAKAH PROGRAMME Attachments: No attachment available. Disclaimer: The user, including a user who is also a FAST Participant, expressly agrees that the use of this website which is accessible at https://fast.bnm.gov.my/ is at the user's sole risk. The information contained in this FAST website is compiled by MyClear Sdn. Bhd. (MyClear) and is provided on an "as is" basis without any representations or warranties of any kind, either expressed or implied. While MyClear makes every effort to ensure that information contained in the FAST website are accurate and disseminated in a timely and efficient manner, the user acknowledges that delays, errors, omissions or inaccuracies may occur. MyClear disclaims any liability pertaining to the consequences of any delays, errors, omissions or inaccuracies arising out of or relating to the FAST website or information, including but not limited to, any decision made or action taken by a user in reliance upon such information, or for damages suffered, whether direct, consequential, special, punitive, indirect or otherwise, notwithstanding having been advised of the possibility of such damages. In the event of any dispute, the official records of MyClear shall prevail. MyClear, Bank Negara Malaysia or any of its affiliates, officers, directors, agents or any other party involved in creating, producing or delivering the FAST website, shall not be liable for any direct, consequential, special, punitive, indirect, incidental or other damages arising out of or in any way connected with the use or inability to use the FAST website or information, whether based on contract, tort, liability or otherwise, even if advised on the possibility of any such damages. Content MARC has affirmed its AAIS rating on toll road concessionaire ANIH Berhad's (ANIH) RM2.5 billion Senior Sukuk Musharakah Programme with a stable outlook. The rating incorporates the stable traffic performance of and sufficient cash flow generation from ANIH's portfolio of mature toll roads to support its finance service obligations. The rating also benefits from the subordinated and equitylike RM620.0 million Junior Bonds which allow ANIH to withstand stresses. Constraining the rating are ANIH's high gearing level and significant reliance on toll hikes to maintain its financial metrics. ANIH is the concessionaire of the Kuala LumpurKarak Highway (KLKarak), Phase 1 of the East Coast Expressway (ECE1) and the Kuala LumpurSeremban Expressway (KL Seremban); for financial year ended March 31, 2016 (FY2016), these highways respectively contributed 47%, 43% and 10% of the company's toll revenue. For FY2016, the KLKarak registered higher traffic growth of 3.1% to 116,644 passenger car units per day (pcu/day) despite the toll hike implementation in October 2015 (FY2015: 1.2%; 113,159 pcu/day). The improved traffic growth is attributable to traffic spillover from Phase 2 of the East Coast Expressway (ECE2) after it commenced commercial operations in July 2015. The direct connectivity to ECE2 from ECE1 has also enabled the latter to register stronger traffic volume growth of 7.2% to 22,375 pcu/km/day (FY2015: 3.2%; 20,876 pcu/km/day). MARC also observes that the traffic volume on the ECE1 was 6.0% above the projected volume in FY2016 which helped to offset the traffic underperformance on the KLKarak of negative 2.5% against traffic forecasts. The highway has been affected by the prolonged closure of the Genting Highland outdoor theme park, which is scheduled to reopen at end2017. MARC notes that the lowerthanprojected traffic volume of the KLSeremban, which grew 3.6% to 138,784 pcu/day in FY2016 (2.1% below projections), has minimal impact on ANIH's cash flow given the highway's small contribution. While the KLKarak was allowed a toll hike on October 15, 2015, the toll hike on the ECE1 has been deferred since January 1, 2015. The government provided a portion of cash compensation amounting to RM30.2 million on December 29, 2015 following the deferment. For FY2016, ANIH's cash flow from operations (CFO) stood at RM222.3 million and was sufficient to cover its financing service obligations of RM212.0 million during the year. ANIH's debttoequity ratio improved slightly to 2.70 times following the redemption of its RM80 million senior sukuk (FY2015: 2.86 times). MARC notes that ANIH's liquidity position remained strong on the back of ample balance sheet cash of RM357.9 million as at March 31, 2016. This was partly supported by the partial deferment of Junior Bonds profit payments and a conservative dividend distribution practice. The company's forwardlooking https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016110900013&mode=DISPLAY&info=NEWS&screenId=PB010400 1/2
- 11 /9/2016 Latest Announcement (News ID : 2016110900013) conservative dividend distribution practice. The company's forwardlooking finance service cover ratio (FSCR) for FY2016 stood at 2.57 times, providing a comfortable margin against the covenanted FSCR of 1.75 times. Under the base cash flow projections, ANIH's minimum predistribution FSCR with cash balance stands at 2.68 times during the senior sukuk tenure. MARC's sensitivity analysis, which incorporates significant traffic underperformance, reveals that ANIH's debt service capacity would remain resilient only if toll hikes are implemented on the ECE1 beginning in 2017 and if remaining compensation from the government is received. If these assumptions are not met, ANIH would breach its FSCR covenant by FY2021 and face default risk in FY2023. MARC opines the risk of severe traffic underperformance to be remote, taking into consideration the highways' long operating history and mature traffic profile. In addition, senior sukukholders can derive comfort from the restrictive FSCR covenant of 2.50 times postdistribution that helps prevent further weakening of the liquidity buffer during cash flow stress. MARC views that ANIH would be able to service its senior sukuk obligations should the current toll rates remain unchanged with no compensation provided the highways' traffic performance is in line with projections. However, in order to maintain cash flow metrics that are commensurate with the current rating band, the rating agency views the timeliness of monetary compensation from the government as crucial. The stable outlook incorporates the rating agency's expectations that ANIH would maintain its credit profile supported by stable traffic performance from its toll assets. The rating and/or outlook could face downward pressure if ANIH's FSCR and liquidity buffer deteriorate as a result of delays in receiving toll compensations in lieu of toll hikes. Contacts: Ng Chun Kean, +6032082 2230/ chunkean@marc.com.my; David Lee, +603 2082 2255/ david@marc.com.my November 9, 2016 [This announcement is available in the MARC corporate homepage at http://www.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. © 2016 Malaysian Rating Corporation Berhad https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016110900013&mode=DISPLAY&info=NEWS&screenId=PB010400 2/2
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