MAHB’s sukuk issuance to put it on better financial footing, says MIDF

It was oversubscribed by 9 times as the total orders received surpassed RM4.6b at peak 

by ANIS HAZIM / Pic by MUHD AMIN NAHARUL

MALAYSIA Airports Holdings Bhd’s (MAHB) sukuk issuance will re-establishing the group’s financial footing according to MIDF Research which has a “Buy” call on the airport operator. 

MAHB issued RM800 million senior sukuk wakalah under its RM5 billion sukuk wakalah programme last week. 

The sukuk issuance was oversubscribed by nine times as the total orders received surpassed RM4.6 billion at peak. 

“To cater to the strong demand, the size of the issuance was increased to RM800 million from the initial target of RM500 million,” stated MIDF in a note on the company last Friday. 

MIDF views the RM5 billion fund programme would help MAHB re-establish its financials especially as a RM1.5 billion sukuk falls due in December 2022. 

“This is in addition to the RM1.3 billion revolving credit facility and unutilised sukuk of RM1.8 billion that are at its disposal,” the MIDF report stated. 

The sukuk exercise saw MAHB offer three tranches comprising RM475 million, RM225 million and RM100 million portions, with tenures between five, seven and 10 years, and an annual profit rate between 3.87%, 4.14% and 4.25% respectively. 

The proceeds from the sukuk issuance have been earmarked for capital working requirements, capital expenditure, general investments or other general corporate purposes, refinancing of existing and future borrowings, and expenses related to the issuance. 

MIDF estimates for the financial year of 2021 and forward earnings on MAHB remain unchanged at the moment. 

“We maintain our ‘Buy’ call with an unchanged discounted cashflow-derived target price of RM6.70 and the weighted average cost of capital of 7%,” it added. 

The research house, however, remains cautious with the current Covid-19 situation.

“With the recent developments in the worldwide Covid-19 situation, we are cautiously optimistic on the demand for air travel as MAHB’s turnaround for profitability hinges on the return of international travellers,” it wrote.

Concurrently, MAHB has obtained AAA/Stable and AA2 initial ratings respectively from RAM Rating Services Bhd for its sukuk issuance exercise. 

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