Journey to Wealth
Litrak Holdings - Smooth flow Hold
- 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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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
