Apr 20, 2010

PLUS eXpressways : Maintain Buy

PLUS Expressways (RM3.36; Buy; Price Target: RM4.00; PLUS MK)

YTD March 2010 traffic volume up 9.1% y-o-y PLUS Expressways (PLUS) reported YTD traffic volume growth to March 2010 of 9.1% y-o-y for its core highways of North-South Expressway; New Klang Valley Expressway; Federal Highway Route 2 and Seremban-Port Dickson Highway. For the month of March alone, traffic volume was up by 7.8%. Its other highways of Elite, Linkedua and Butterworth-Kulim Expressway showed traffic volume growth of 14.7%,22.4% and 11.8% respectively YTD. 

It looks like PLUS has ended 1Q10 with a strong start but it remains to be seen if this growth is sustainable in the quarters ahead especially if a fuel price hike materialises in 2H10. Our 2% traffic volume growth in FY10 may be looking conservative implying some upside to our FY10 DPS of 17.5 sen (payout of 72% below its minimum KPI payout of 75%). Reiterate Buy with an unchanged target price of RM4.00.

source: HWDBS Vickers