Stock Name: PLUS
Company Name: PLUS EXPRESSWAYS BHD
Research House: MIDF
PLUS Expressways Bhd
(March 23, RM3.41)
Upgrade to buy at RM3.37, target price raised to RM3.85: PLUS is eyeing more highway concessions in the Asia-Pacific region as part of its expansion plan. We believe that India and Vietnam are the target markets.
The greatest potential would be in India. While PLUS is already managing and collecting toll for the 21.5km Bhiwandi-Kalyan-Shil Phata Highway in the state of Maharashtra, and is proposing to acquire 74% stake in Indu Navatuga Infra Project Private Ltd, a concessionaire of the 95% completed 38.6km Padalur-Trichy Highway in the state of Tamil Nadu, south of Chennai, we believe there are rooms for further expansion into the country.
India currently has 66,590km of highway called the National Highway, with 200km designated as expressway and 10,000km have four lanes or more. Although the highways constitute only approximately 2% of total road network, it carries nearly 40% of the total traffic.
PLUS had experienced delay in the completion of the highway and toll collection, due to issues pertaining to land acquisition process from the Indian authorities. However, the Indian Road Transport Ministry has asked the National Highway Authority of India to set up 150 land acquisition units to speed up the process and it plans to acquire at least 20km of land a day, which is incidentally the same length of road it targets to construct in a day.
With its experience and commitment by the Indian government to speed up land acquisition process, we expect that PLUS would be bidding to play some part in upgrading the 14,811km yet to be awarded.
We upgrade our recommendation to a buy with a higher target price of RM3.85 based of discounted-cash flow valuation of 10%. We believe the Indian government is fully committed to ensure the completion of the National Highway Development Project. We are revising our net profit forecast for financial year ending Dec 31, 2011 by 3% and onwards by an average of 8% to better reflect the growing overseas contribution. - MIDF Research, March 23
This article appeared in The Edge Financial Daily, March 24, 2010.
Company Name: PLUS EXPRESSWAYS BHD
Research House: MIDF
PLUS Expressways Bhd
(March 23, RM3.41)
Upgrade to buy at RM3.37, target price raised to RM3.85: PLUS is eyeing more highway concessions in the Asia-Pacific region as part of its expansion plan. We believe that India and Vietnam are the target markets.
The greatest potential would be in India. While PLUS is already managing and collecting toll for the 21.5km Bhiwandi-Kalyan-Shil Phata Highway in the state of Maharashtra, and is proposing to acquire 74% stake in Indu Navatuga Infra Project Private Ltd, a concessionaire of the 95% completed 38.6km Padalur-Trichy Highway in the state of Tamil Nadu, south of Chennai, we believe there are rooms for further expansion into the country.
India currently has 66,590km of highway called the National Highway, with 200km designated as expressway and 10,000km have four lanes or more. Although the highways constitute only approximately 2% of total road network, it carries nearly 40% of the total traffic.
PLUS had experienced delay in the completion of the highway and toll collection, due to issues pertaining to land acquisition process from the Indian authorities. However, the Indian Road Transport Ministry has asked the National Highway Authority of India to set up 150 land acquisition units to speed up the process and it plans to acquire at least 20km of land a day, which is incidentally the same length of road it targets to construct in a day.
With its experience and commitment by the Indian government to speed up land acquisition process, we expect that PLUS would be bidding to play some part in upgrading the 14,811km yet to be awarded.
We upgrade our recommendation to a buy with a higher target price of RM3.85 based of discounted-cash flow valuation of 10%. We believe the Indian government is fully committed to ensure the completion of the National Highway Development Project. We are revising our net profit forecast for financial year ending Dec 31, 2011 by 3% and onwards by an average of 8% to better reflect the growing overseas contribution. - MIDF Research, March 23
This article appeared in The Edge Financial Daily, March 24, 2010.
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