lee9fold RM2 can happened by July 2015 onwards..not in near term. Once the highway is self sustained, spinning of O&G and Highway is not impossible

well said sklyte

why worry? TP still rm 2

No toll hike this year but rm400m will be paid to concessionaire. anyone have any idea whats compensation paid to silk? rm0.30 per car?

Duke highway was sold to Ekovest at valuation of RM760m.

Duke Financials FY2012 : Rev89.2m LBT :RM38.1m

whats the value of silk highway?

This is just the beginning of continuous uptrend of SILK. Both Silk O&G & Highway Division are extremely undervalued.

Highway Division - Historical traffic growth of 12% p.a & 63m cars p.a
- avg toll at RM1.20 (including 20 sen compensation by gov)
- Expected increase RM1.80 ( toll rate of RM1.50+ 30 sen compensation)
- Toll concession have sticky customer base and 50 sen hike unlikely to deter
growth of at least 10%
- Expected EBITDA - FY2014: RM86m FY2015: RM118.2m
- Estimated valuation - (8x EV/EBITDA) RM500m

O&G Division - owned 18 vessels (including 3 under construction) of which 7 are deep water
vessels. At 85% utilisation rate all 7 vessels expected to contribute RM100m
EBITDA.
- High probability to secure Petronas deep water OSV contract
- FY2013 EBITDA : RM173.1 FY2014 Est :RM200m
- Estimated equity valuation (net of MI) - RM800
- Competitor EBITDA in comparison FY2014E : Alam: RM125.5m, Perdana-
RM151.1m
- Lower PAT due to : 1) aggressive depreciation policy of 15 years as opposed to 25
years (industry norm) 2) Presence of MI in JV co which is now 100% subsidiary of
Jasa

Summary - Estimated valuation based on above assumptions - RM1.3bn. Assuming 30% haircut
company is still worth at least RM1bn. In comparison current market cap stands at
RM352m. Significant potential uplift in return

Disclosure: I am long SILK. I wrote this analysis myself, and it expresses my own opinions.Investors are advised to conduct own financial due diligence & company research before making an investment decision. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this analysis.

Risk Trader : RM2.10