M'sia Airports falls 2% on rights issue for Turkey airport concession stake buy

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KUALA LUMPUR (Nov 11): Malaysia Airports Holdings Bhd (MAHB) fell as much as 2% on its planned rights issue of new shares to finance the acquisition of the remaining 40% in its Turkey airport concession.

MAHB fell as much as 14 sen to RM6.94 before reducing losses. At 10.48am, the stock was traded at RM6.96 with 140,800 shares done.

The stock was the eighth-largest decliner across the exchange. For comparison, the FBM KLCI fell 2.43 points or 0.1%.

Yesterday, MAHB said it planned to undertake a rights issue of new shares to finance the purchase of the remaining 40% stake in the concession for the Istanbul Sabiha Gokcen International Airport.

The transaction is valued at EUR285 million (RM1.18 billion).  

Today, AmResearch Sdn Bhd analyst Wong Joe Vuei said MAHB's rights issue did not come as a surprise to the investment fraternity.

In a note today, Wong said the rights issue was crucial because debt financing would raise MAHB's gross gearing to 1.22 times.

The gearing level will breach the one-time ceiling needed to retain MAHB's AAA credit rating, according to Wong.

"With this (rights issue) exercise, gross gearing would drop to a comfortable level of 0.82x.

"Via this exercise, we estimate a 17% dilution to our FY15F EPS. Also our ex-rights SOP (target price) will drop to RM6.54/share, based on the indicative price," Wong said.