- We maintain our HOLD recommendation on Lingkaran Trans Kota Holdings (Litrak) with a higher fair value of RM4.06/share (previously: RM3.93/share) on an unchanged 15% discount to its revised DCF value.
- The changes mainly take into account: (i) a slightly lower discount rate ascribed to both LDP and SPRINT – i.e. at 6.5% and 7.5% respectively; and (ii) higher margins for LDP.
- Litrak reported 1QFY13 net profit of RM35mil on the back of a turnover of RM93mil. The first quarter reporting period constituted 29% of consensus, and 40% of our previous forecast.
- Despite only a marginal 4% QoQ increase in topline growth, Litrak returned to the black during the quarter compared to a RM35mil loss in 4QFY12.
- The positive variance versus our previous full-year forecast was largely due to lumpier depreciation/amortisation charges that we had projected for the remaining concession period for LDP – following a revision in toll revenue projections carried out for the urban highway in 4QFY12.
- While the depreciation/amortisation cost for 1QFY13 rose +40% YoY to RM13mil off a higher-base, the quantum has normalised. The entire adjustments as a result of the LDP traffic review had already been accounted for during the preceding quarter.
- By and large, we have also raised FY13F-15F net profit forecasts by 38%-51%. But, we stress that the revisions are largely due to the changes to our depreciation/amortisation assumptions highlighted above that are non-cash in nature.
- Litrak declared a single-tier tax-exempt dividend/share of 10 sen during the quarter – matching last year’s payout (our FY13F: 18 sen).
- However, Litrak’s projected dividend yields have since compressed to a decent 4%-5% amid a lack of fresh rerating catalysts.
- News of the group emerging as a potential takeover target for PLUS has since died down amid a protracted restructuring of Malaysia’s entire toll industry. As such, our HOLD call remains intact.
Source: AmeSecurities
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