MARC has affirmed its AAIS rating on ANIH Berhad’s 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.
The affirmed rating reflects ANIH’s healthy cash flow generation and adequate debt coverage, underpinned by stable traffic performance of KL-Karak and ECE1. The rating also benefits from the subordinate and equity-like features of ANIH’s RM620 million Junior Bonds, which should provide some cushion against operational underperformance. However, high gearing remains a key rating constraint for ANIH. The stable outlook on the rating reflects MARC’s expectation that ANIH will continue to demonstrate a commendable liquidity profile by maintaining healthy cash levels over the next 12-18 months.
KL-Karak and ECE1’s traffic data over April-July 2020 reflected the impact of COVID-19. Traffic on KL-Karak and ECE1 fell 47.3% and 41.5% y-o-y during the period, but have rebounded strongly since May 2020 after measures to curb the spread of the virus were eased in the country; road travel has in fact returned to pre-coronavirus levels by July 2020. Notwithstanding some weaknesses in the last few months following the coronavirus crisis, traffic on the mature KL-Karak and ECE1 have been on a path of steady, albeit moderate, growth. Road traffic for the two highways have grown at a compound annual growth rate of 1%-2% over FY2015-FY2019 and MARC expects this to continue once COVID-19 is brought under control.
Under MARC’s sensitised scenario, we have assumed a 30% and 20% decline in traffic for KL-Karak and ECE1 in FY2021, a recovery to 90% of FY2020’s level in FY2022, a full recovery by FY2024 and a growth trend of 1%-2% onwards. In this scenario, average FSCR is projected at 2.15x with a minimum coverage of 1.93x in FY2028. Our projections indicate that ANIH would be able to withstand a revenue decrease of 32% y-o-y in FY2021 and still meet the covenanted 1.75x FSCR.
Contacts:
Ahmad Ikmal Mohd Shahril, +603-2717 2963/ ikmal@marc.com.my;
Hafiza Abdul Rashid, +603-2717 2955/ hafiza@marc.com.my.