Litrak’s 4Q revenue up only 0.6% due to matured traffic growth

by **Cals** Wed 04 Jun 2014, 02:55

Business & Markets 2014

Written by MIDF Research

Tuesday, 03 June 2014 10:11

Lingkaran Trans Kota Holdings Bhd
(June 2, RM3.85)
Maintain buy with target price of RM4.56: For the fourth quarter ended March 31 of financial year 2014 (4QFY14), Litrak recorded a net profit of RM37.2 million, bringing its full-year accumulated earnings to RM134.1 million (+2.5% year-on-year [y-o-y], +18.9% quarter-on-quarter [q-o-q]). The higher sequential 4QFY14 growth by 19% q-o-q was mainly attributable to one-off adjustment in statutory tax assessment from 25% to 24% with the effective year of assessment from 2016.

The earnings before interest and tax (Ebit) margin depressed by 3.2 percentage points on-year following 22% y-o-y and 18% y-o-y hikes in highway maintenance expense and staff costs respectively.

Revenue grew merely 0.6% y-o-y to RM92 million amid matured traffic growth in Lebuhraya Punchong-Damansara (LDP). For the next financial year, we have projected LDP traffic growth at 1.5% y-o-y, but higher traffic growth for the Sprint highway at 4.5% y-o-y.

The Sprint associate loss was higher at RM2.9 million against the RM1.9 million loss in the same quarter last yearr. We believe that migration of highway users and lane closures due to ongoing works on the mass rapid transit project along the Sprint highway were among the contributing factors for the continued associate losses.

We are maintaining our FY15 and FY16 earnings forecasts given the matured growth profile of the LDP highway. Litrak’s steady cash flow and dividend payout offer a decent dividend yield of between 4% and 5% at current prices.

In view of the recent share price weakness, we reiterate our “buy” stance on Litrak with an unchanged target price of RM4.56. The valuation is premised on the discounted cash flow method. — MIDF Research, June 2

[You must be registered and logged in to see this image.]

[size]

This article first appeared in The Edge Financial Daily, on June 03, 2014.[/size]