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RAM Ratings assigns preliminary AAA(fg)/Stable rating to INTI’s proposed MTN
Published on 18 Jul 2023.
RAM Ratings has assigned a preliminary rating of AAA(fg)/Stable to INTI Universal Holdings Sdn Bhd’s (INTI or the Group) proposed RM300.0 mil Medium-Term Notes Programme (proposed MTN). The preliminary enhanced rating reflects an irrevocable and unconditional guarantee provided by Credit Guarantee and Investment Facility (rated AAA/Stable/P1 by RAM).
Founded in 1986, INTI operates one university in Negeri Sembilan and a college each in Selangor, Penang and Sabah, offering pre-university, undergraduate and postgraduate programmes as well as professional certificates. On average, over 13,000 students are currently enrolled at the four campuses. INTI fosters collaborations with about 350 reputable universities worldwide and more than 500 corporate leaders to provide high-quality education. INTI is 51% owned by Hope Education Group (Hong Kong) Co Ltd (made up of 49% from Hope Education Group HK and 2% from the trustee of Hope Education Group HK), while the remaining shares are held by a local private company – Intisari Tadbir Sdn Bhd.
Excluding the guarantee, INTI’s credit profile reflects its established brand name and track record in the private higher education sector. Ranking in the top 10% of public and private higher education institutions in Malaysia, the Group is geographically diversified by virtue of its presence in the four states. By leveraging on the network of its parent, INTI is expected to gain better access to the Chinese market, which accounts for half of the foreign students in Malaysia. Despite a heftier debt load from the expected drawdown of the proposed MTN, INTI’s funds from operations debt cover is anticipated to remain healthy at about 0.17 times going forward. The proceeds of the proposed MTN are intended for operating expenditure for campuses in Nilai, Penang and Subang.
Moderating INTI’s standalone credit profile is its planned adoption of a more aggressive financial policy going forward, a departure from its historically conservative balance sheet. Once the bond programme has been fully issued, our projection which also incorporates dividend payouts to shareholders will result in the Group’s projected gearing ratio to peak at over 2.5 times. Additionally, INTI operates in a highly competitive industry, exposed to the risk of regulatory changes and industry disruptions.
Analytical contacts
Wong Ee Loo
(603) 3385 2521
eeloo@ram.com.my
Thong Mun Wai
(603) 3385 2522
munwai@ram.com.my
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
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Published by RAM Rating Services Berhad
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