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PLUS20100820_Bursa_

PLUS20100820_Bursa_

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Published by limml63
DCF-derived fair value is RM4.33 (based on
WACC of 7.7%, FY12/10 traffic volume growth assumption of
5% and long-term traffic volume growth assumption of 3% p.a. for
its core expressways). We continue to like PLUS for its defensive
earnings quality and decent dividend yield of 4.5-5.5% per annum.
Maintain BUY.
DCF-derived fair value is RM4.33 (based on
WACC of 7.7%, FY12/10 traffic volume growth assumption of
5% and long-term traffic volume growth assumption of 3% p.a. for
its core expressways). We continue to like PLUS for its defensive
earnings quality and decent dividend yield of 4.5-5.5% per annum.
Maintain BUY.

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Published by: limml63 on Aug 21, 2010
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05/12/2014

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2QFY10 Results 
Page 1 of 3
 Date: 20 August 2010 Price:
 RM3.98
Name of PLCs: PLUS Expressways
1HFY10 Net Profit Rises On Higher Traffic Volume
 Market Capitalisation:
 RM19,900.0m
 Board:
 Main Board 
Sector:
Trading/Services
Stock Code:
5052
 Recommendation:
 BUY 
  Index Component/Constituent :
-
 
 Key Stock Statistics
2010F 2011FEPS (est.) 24.5 37.4P/E (est.) 16.3 10.6Dividend/Share (sen) 18.0NTA/Share (RM) 1.28Book Value/Share 1.28Issued Capital (mil shares) 5,000.052-weeks Share Price Range 3.19 4.03Major Shareholders: %Khazanah Nasional 60.6EPF 12.1
 Per Share Data
2008 2009 2010F 2011FBook Value (RM) 1.14 1.22 1.28 1.46Cash Flow (sen) 36.3 33.9 34.7 34.7Earnings (sen) 21.6 23.2 24.5 37.4Dividend (sen) 16.0 16.5 18.0 20Payout Ratio 74.1 71.0 73.5 53.5PER (x) 18.4 17.1 16.3 10.6P/Cash Flow (x) 11.0 11.7 11.5 11.5P/Book Value (x) 3.5 3.3 3.1 2.7Dividend Yield (%) 4.0 4.1 4.5 5.0ROE (%) 19.0 19.0 19.1 25.6Net Gearing (%) 1.5 1.4 1.4 1.3
 P&L Analysis(RM mil)
Year-end: Dec2008 2009 2010F 2011FRevenue 2,968.0 3,185.7 3,346.4 4,332.9EBITDA 2,544.3 2,568.9 2,674.7 3,601.3Depreciation -383.4 -361.1 -384.0 -450.0Interest Expenses -645.2 -659.1 -659.1 -659.1Pre-tax Profit 1,515.7 1,548.7 1,631.7 2,492.1Effective Tax Rate 28.7 25.0 25.0 25.0Net Profit 1,079.3 1,161.5 1,223.8 1,869.1EBITDA Margin 85.7 80.6 79.9 83.1Pre-tax Margin 51.1 48.6 48.8 57.5Net-Margin 36.4 36.5 36.6 43.1
 PE Band Chart
1. HighlightsIn line.
1HFY12/10 reported net profit of RM618.7m, in line withexpectations, accounting for 50.6% of our and 50.5% of consensusfull-year estimates.
YoY.
1HFY12/10 net profit rose by 10.5% to RM618.7m fromRM560.0m a year ago due to: 1) An 11.2% increase in tollcollection (which was in turn driven by a 9.8% traffic volumegrowth registered at PLUS’s core expressways; and 2) A 9.1%increase in toll compensation that more than offset higher netinterest and tax expenses.
QoQ.
2QFY12/10 net profit rose by 6.8% to RM319.6m fromRM299.1m in the previous quarter mainly due to a 5.7% qoqincrease in turnover.
Declares 7.5 sen interim dividend.
PLUS declared an interimsingle-tier DPS of 7.5 sen, which translates into a net yield of 1.9%. The entitlement date for the interim dividend is 6 Sep 10while payment date is 24 Sep 10. For the full-year, we expectPLUS to declare a total DPS of 18 sen (translating to a total netyield of 4.5%), which is in line with management’s targetedpayout ratio of 75% of its FY12/10 net profit.
 
PER = 15xPER = 13xPER = 11x
http://www.bursamalaysia.com/website/bm/listed_companies/cmdf_bursa_research_scheme/eResearch.jsp
RHB ResearchInstitute Sdn Bhd
A member of theRHB Banking Group
Company No: 233327 -M
 Analyst – Chye Wen Fei
(603) 9280 2172 chye.wen.fei@rhb.com.my
   M  a   l  a  s  i  a
   M   A   R   K   E   T   D   A   T   E   L   I   N   E
 
   P   P    7   7   6   7   /   0   9   /   2   0   1   0   (   0   2   5   3   5   4   )
 
 
2QFY10 Results 
Page 2 of 3
 
IMPORTANT DISCLOSURESThis report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB InvestmentBank Berhad (previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted byapplicable law. The opinions and information contained herein are based on generally available data believed to be reliable and are subject to changewithout notice, and may differ or be contrary to opinions expressed by other business units within the RHB Group as a result of using differentassumptions and criteria. This report is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI doesnot warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claimwhatsoever against RHBRI. RHBRI and/or its associated persons may from time to time have an interest in the securities mentioned by this report.This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances andobjectives of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investorsindependently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of aparticular investment or strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of itsaffiliates, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this report.RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as wellas providing investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, anymember of the RHB Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or loans of any company that may be involved in this transaction.“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respectivedirectors, officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investmentbanking or other services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previousreports.This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may notreflect information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensationbased upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.The recommendation framework for stocks and sectors are as follows : -
Stock Ratings
Outperform =
The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.
Trading Buy =
Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15%or more over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who arewilling to take on higher risks.
Market Perform =
The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.
Underperform =
The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12months.
Traffic volume growth to moderate in the remaining quarters.
 Despite having achieved traffic volume growth of 9.8% at PLUS’score expressways in 1HFY12/10, management is keeping its trafficvolume guidance of 5% in FY12/10, as traffic volume growth islikely to moderate in the remaining two quarters on the back of thehigh base effect in 2HFY12/09.
Risks.
These include: 1) FY12/10-12 traffic volume growth rate of PLUS’s core expressways coming in below our assumption of 5.0% for FY12/10, and 3.0% p.a. for FY12/11 and FY12/12; 2)Higher-than-expected maintenance cost; and 3) Operating risks inoverseas ventures (in particular, Indonesia and India).
Forecasts.
Unchanged.
2. Recommendation
 
Investment case.
DCF-derived fair value is RM4.33 (based onWACC of 7.7%, FY12/10 traffic volume growth assumption of 5% and long-term traffic volume growth assumption of 3% p.a. forits core expressways). We continue to like PLUS for its defensiveearnings quality and decent dividend yield of 4.5-5.5% per annum.Maintain
BUY.
 

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