Gamuda's urban toll road concessionaire
Lingkaran Trans Kota Holdings Bhd (Litrak) is an associate company ofGamuda Bhd, with the latter owning a 44.8% stake. Litrak's major assets are 100% interest in Lingkaran Trans Kota Sdn Bhd (LTK), which owns theLebuh Raya Damansara-Puchong (LDP) and 50% interest in Sistem Penyuraian Trafik KL Barat Sdn Bhd (Sprint), owner of the privatized road called Western KL Traffic Dispersal Scheme (WTDS). Both are BOT urban tol roads of 40 and 26km in lengths with outstanding concession lives of 22
and 23 years respectively.
BUY ? steep 24% discount to DCF per share plus low PERs
Litrak is trading on a steep 24% discount to DCF valuation of RM4.68 per share, in addition to decent prospective PE valuations of 14-16x. Whilst we do not expect Litrak to trade at full DCF valuation due to perceptions of risks associated with the concession toll rates, we anticipate the discount to narrow as Litrak puts its excess cash to good use ? rewarding its shareholders. Our 12-month target price is RM4.20,
ascribing an arbitrary 10% discount to our DCF value.
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Tuesday, 1 April 2008
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