MARC affirms ‘AAIS’ rating on Anih’s sukuk
KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) has affirmed its “AAIS” rating on Anih Bhd’s RM2.5 billion senior sukuk musharakah programme, with the rating outlook revised to “stable” from “negative”.
The rating agency said the outlook revision reflects the steady traffic growth on the Kuala Lumpur-Karak Expressway and Phase 1 of the East Coast Expressway (ECE) that would remain supportive of the company’s cash flow generation to meet the concessionaire’s finance service obligations.
Anih holds the concessions for both highways until 2032.
It previously held the concession for the Kuala Lumpur- Seremban Expressway which ended in May last year.
MARC said Anih is in a better position than other concessionaires in facing changes in the toll industry in the intermediate term.
While the government recently announced compensation in lieu of deferred toll hikes this year, MARC views this as an interim measure.
It expects Anih to demonstrate a commendable liquidity profile by maintaining healthy cash balance levels.
“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 agency also said for the financial year ended March 31 2018, Kuala Lumpur-Karak Expressway’s traffic volume grew 3.4 per cent year-on-year to 123,845 passenger car units per day (pcu/day) while ECE grew 1.9 per cent to 22,766 pcu/km/day.
The sustained growth in traffic volume on the two highways during the eight months of the 2019 financial year is mainly attributed to higher traffic leading up to Hari Raya and year-end holidays.
Meanwhile, traffic volume on the Kuala Lumpur-Seremban Expressway declined in the 2018 financial year and in the first quarter of the 2019 financial year due to bottlenecks caused by constructions.
MARC also said the expiry of the Kuala Lumpur-Seremban Expressway concession has had some impact on Anih’s cash flow given that the toll contribution from this highway had averaged 10.4 per cent of total toll revenue for the past five years.
For the 2018 financial year, Anih’s toll revenue rose 2.6 per cent to RM431.8 million in line with overall traffic volume growth.
However, due to the realisation of lower government compensation amounting to RM33.1 million vis-à-vis RM45.8 million in the 2017 financial year, overall revenue was lower, said MARC.
It estimates that revenue growth on the Kuala Lumpur- Karak Expressway and ECE would make up for the lost revenue over the medium term.
As the traffic volume on both expressways continue to be lower than the projections given in the traffic consultant’s report, MARC has revised downwards the base case traffic for the Kuala Lumpur-Karak Expressway by three per cent and ECE by five per cent.