Top Story : PLUS – Expecting higher FY12/09 traffic volume growth Outperform
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- PLUS hinted that it is likely to raise its core expressways’ traffic volume growth rate guidance from 3-4% to above 5% in the coming quarterly results, due to strong YTD traffic volume growth of 6.4%.
- The migration of accounting standards to IFRIC 12, if this happens, will require concessionaires including PLUS to:
1) Switch amortisation method from revenue-based to either straight-line method or volume-based method; and
2) Exclude concession assets as part of the tangible assets. PLUS felt that the change in accounting treatment is unlikely to come in soon. In any case, this will not affect our DCF-derived NPV for PLUS, given that amortisation expense is a non-cash item.
- PLUS believes that Khazanah, which currently owns 60.6% is unlikely to further pare down its stake.
- We are raising FY12/09 net profit forecast by 1.2% to reflect an 1%-pt rise in our FY12/09 traffic volume growth rate assumption at PLUS’s core expressways that more than offset higher depreciation and amortisation expenses. FY12/10 net profit forecast is lowered by 1.6% to reflect higher depreciation and amortisation expenses.
- We are raising our fair value estimate by 13.5% from RM3.64 to RM4.13, to reflect:
1) Lower weighted average cost of capital of 7.7%; and
2) The upgrade in our FY12/09 traffic volume growth rate assumption.
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