According  to  Bloomberg,  MAHB  plans  to  exercise  its  rights  on  the remaining  40%  stake  on  Istanbul  Sabiha  Gokcen  Airport  (ISGA)  – according to people familiar to the matter . Based on to the news report, MAHB has until today to match TAV’s offer of Euro285m (c. RM1.2bn). (Source: bloomberg)

Comment:  As  at  this  morning,  no  official  announcement  was  made. Decision  to  exercise  the  rights  would  be  within  our  expectation.  The move  will  strain  MAHB’s  balance  sheet  due  to  potential  funding  and consolidation  of  ISGA’s  debt.  An  assumed  full  debt  funding  could potentially  compromise  its  AAA  rating  while  an  equity  market  exercise will  dilute  group’s  earnings  base  while  earnings  accretion  will  not  be immediate.  Maintain  REDUCE  on  MAHB  and  target  price  of  RM6.20. Please refer to our note dated 15th October 2014 for further details on our views and comments.

Source: Affin Hwang Capital Research - 21 Oct 2014