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Litrak sees stable earnings from rate hikes
by Cals Thu 15 Oct 2015, 17:43
Litrak sees stable earnings from rate hikes
By PublicInvest Research / The Edge Financial Daily | October 15, 2015 : 10:52 AM MYTLingkaran Trans Kota Holdings Bhd
Oct 13 (RM5.20)
Maintain neutral with a higher target price of RM4.70 (from RM4.60 previously) after some adjustments to the balance sheets: Lingkaran Trans Kota Holdings Bhd (Litrak) on Monday announced that it would increase toll rates for Lebuhraya Damansara-Puchong (LDP) effective today. The new toll rate structure has been effective since 2012 as per the concession agreement with the government, which has been paying the difference in the rates. This was compensated by the government as the toll rates were not adjusted as per the concession agreement.
As the LDP is a mature highway, we do not see any meaningful impact earnings-wise. Hence, our earnings are kept unchanged.
Litrak received around RM90 million from the government in financial year 2015 as compensation. The next adjustment will be in 2017, when the rate will be increased further to RM3.10 from RM2.10 for Class 1 vehicles.
We still like Litrak for its stable earnings trajectory, strong free cash flow and certainty in growth from rate hikes bound by the concession agreement. — PublicInvest Research, Oct 13
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