PP 7767/09/2010(025354)

RHB Research Institute Sdn Bhd A member of the RHB Banking Group

Company No: 233327 -M

2QFY10 Results Date: 20 August 2010 Name of PLCs: PLUS Expressways 1HFY10 Net Profit Rises On Higher Traffic Volume Board: Main Board Sector: Trading/Services Stock Code: 5052 Recommendation: BUY Index Component/Constituent : Price: Market Capitalisation: RM3.98 RM19,900.0m

Key Stock Statistics EPS (est.) P/E (est.) Dividend/Share (sen) NTA/Share (RM) Book Value/Share Issued Capital (mil shares) 52-weeks Share Price Range Major Shareholders: Khazanah Nasional EPF

2010F 24.5 16.3 18.0 1.28 1.28 5,000.0 3.19 – 4.03 % 60.6 12.1

2011F 37.4 10.6

PE Band Chart

PER = 15x PER = 13x PER = 11x

Per Share Data Book Value (RM) Cash Flow (sen) Earnings (sen) Dividend (sen) Payout Ratio PER (x) P/Cash Flow (x) P/Book Value (x) Dividend Yield (%) ROE (%) Net Gearing (%)

2008 1.14 36.3 21.6 16.0 74.1 18.4 11.0 3.5 4.0 19.0 1.5

2009 1.22 33.9 23.2 16.5 71.0 17.1 11.7 3.3 4.1 19.0 1.4

2010F 1.28 34.7 24.5 18.0 73.5 16.3 11.5 3.1 4.5 19.1 1.4

2011F 1.46 34.7 37.4 20 53.5 10.6 11.5 2.7 5.0 25.6 1.3 YoY. 1HFY12/10 net profit rose by 10.5% to RM618.7m from RM560.0m a year ago due to: 1) An 11.2% increase in toll collection (which was in turn driven by a 9.8% traffic volume growth registered at PLUS’s core expressways; and 2) A 9.1% increase in toll compensation that more than offset higher net interest and tax expenses. QoQ. 2QFY12/10 net profit rose by 6.8% to RM319.6m from 1. Highlights In line. 1HFY12/10 reported net profit of RM618.7m, in line with expectations, accounting for 50.6% of our and 50.5% of consensus full-year estimates.

P&L Analysis (RM mil) Year-end: Dec Revenue EBITDA Depreciation Interest Expenses Pre-tax Profit Effective Tax Rate Net Profit EBITDA Margin Pre-tax Margin Net-Margin





RM299.1m in the previous quarter mainly due to a 5.7% qoq increase in turnover. Declares 7.5 sen interim dividend. PLUS declared an interim

2,968.0 2,544.3 -383.4 -645.2 1,515.7 28.7 1,079.3 85.7 51.1 36.4

3,185.7 2,568.9 -361.1 -659.1 1,548.7 25.0 1,161.5 80.6 48.6 36.5

3,346.4 2,674.7 -384.0 -659.1 1,631.7 25.0 1,223.8 79.9 48.8 36.6

4,332.9 3,601.3 -450.0 -659.1 2,492.1 25.0 1,869.1 83.1 57.5 43.1

single-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 10 while payment date is 24 Sep 10. For the full-year, we expect PLUS to declare a total DPS of 18 sen (translating to a total net yield of 4.5%), which is in line with management’s targeted payout ratio of 75% of its FY12/10 net profit.

Analyst – Chye Wen Fei

(603) 9280 2172

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2QFY10 Results
Traffic volume growth to moderate in the remaining quarters. Despite having achieved traffic volume growth of 9.8% at PLUS’s core expressways in 1HFY12/10, management is keeping its traffic volume guidance of 5% in FY12/10, as traffic volume growth is likely to moderate in the remaining two quarters on the back of the high 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 in overseas ventures (in particular, Indonesia and India). Forecasts. Unchanged. 2. Recommendation Investment case. 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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2QFY10 Results
Industry/Sector Ratings Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months. Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months. Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months. RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended securities, subject to the duties of confidentiality, will be made available upon request. This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the actions of third parties in this respect.

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