LITRAK yesterday announced that it would increase the toll rates for Lebuhraya Damansara-Puchong (LDP) effective from 15 October 2015. The new toll rate structure is in fact already effective since 2012 as per the concession agreement with the Government which has been paying the difference in the toll rates. As LDP is a mature highway, we do not see any meaningful impact earnings-wise. Hence, our earnings are kept unchanged.

• Neutral to earnings. The new toll rate structure was already effective since 2012 but it was compensated by the Government instead as the toll adjustments were not adjusted as per concession agreement. LITRAK received c.RM90m from the government in FY15 as compensation. The next adjustment will be 2017, whereby Class 1 vehicles will increase further to RM3.10 from RM2.10. As there’s no better alternative for LDP, we believe that the traffic drop will not be meaningful with the new toll adjustments.
• Maintain Neutral but raise TP to RM4.70 (from RM4.60 previously) after some adjustments to the balance sheets. We still like LITRAK for its stable earnings trajectory, strong free cash flow and growth certainty from rate hikes bound by the concession agreement.

Source: PublicInvest Research - 13 Oct 2015