Stock Name: LITRAK
Company Name: LINGKARAN TRANS KOTA HOLDINGS
Research House: MIDF



LINGKARAN Trans Kota Holdings Bhd (Litrak), the concessionaire of Damansara-Puchong Highway (LDP), is expected to obtain government approval for a toll increase next year, MIDF Research says.

The research house said the toll hike could affect traffic for the financial year ending March 2011 but the decrease was not expected to be drastic as LDP is still an important route for commuters especially with the lack of efficient public transportation.

"We also believe that the new toll rates should moderate any impact from traffic decrease," it said in a research note today.

In the financial year ended March 2010, traffic at LDP grew 2.0 per cent year-on-year to 470,000.

As for the impact of a fuel price hike, MIDF Research said: "Historically, there has been a knee-jerk reaction from any fuel price increase.

"However, a significant increase in fuel price may cause commuters to find alternative transportation, causing a lost in traffic."

The research house maintained a "buy" recommendation for Litrak with a target price of RM3.60.

"We continue to like Litrak as a strong defensive stock given that LDP still enjoys continuing support from its catchment area of Puchong, Kelana Jaya and Bandar Seri Damansara."

For the first quarter of the current financial year, Litrak registered a 26.1 per cent year-on-year growth in net profit to RM29.5 million which MIDF Research said was due to lower share of losses in Sprint Highway.

"The net profit was only 20 per cent of our full year estimate as we are expecting the scheduled toll rate hike in 2011," it said. - BERNAMA