Corporate News: Toll freeze won’t affect highway operators

By M Shanmugam and Siow Chen Ming

The Malaysian Highway Authority(MHA) has asked all highway operators to state the price of their concessions in the event the government decides to take them back, sources say.
The have been told to come up with an indicative value of their concessions as soon as possible. "Based on the brief contents of the letter from the MHA early last week, it is difficult to ascertain if the government is serious in wanting to take back the concessions. It could merely be a survey to ascertain what it would cost to take back the highways," says a source.
It is learnt that the highway operators have reverted to MHA with "high numbers" on the value of their concessions. There are 26 highway concessionaires, the biggest of which is PLUS Expressways Bhd. Plus operates about 85% of the country's highways, including the North-South Expressway, Central Link Expressway(Elite)that connects Subang Jaya to KLIA and Nilai, the Penang Bridge and the North Klang Valley Expressway(NKVE).
The other major listed players are Lingkaran Trans Kota Holdings Bhd(LItrak) and MTD InfraPerdana Bhd. Litrak's highways are mainly concentrated in the Klang valley while that of MTD Infra's run from Kuala Lumpur to the East Coast. THe latter is also building the second phase of the East Coast Expressway that will take it from Pahang to Terengganu.
The concessionaires have come under scrutiny of late following calls by various quarters to review toll hikes.
All concessionaires have a schedule of toll hikes. If they are not allowed to raise their rates, the government has to compensate them for loss of revenue.
Works Minister Datuk Seri S Samy Vellu was reported recently as saying that it would cost the government RM100 billion to take back all the concessions. Sceptics, however, contend that the cost will be much lower. The market capitalisation of PLUS, for example, is only RM16.6 billion, based on its closing price last week, they say.
“PLUS controls some 85% of the highways in the country. The other highways would probably cost a few billion. Excluding debts, the cost of all the highways would be less than RM40 billion, based on market prices,” says a source.
If the concessionaires’ debts were included, however, the cost would rise substantially. PLUS alone has debts of RM6.9 billion.
But observers argue that the government can re-finance the debts at a much lower cost should it opt to take over the highways.
It is unlikely though, that the concessionaires will value the highways based on the market price of their shares. The favoured valuation method for concessions is discounted cash flow.


Toll freeze
An indication of the base value or lowest possible value of the concessions can also be obtained from the operators’ balance sheets. For instance, based on PLUS’ latest annual report, the value of its concessions is stated as RM8.74 billion.
For MTD Infra, the value of its “concession and heavy repairs”, according to its annual report, is RM1.5 billion, which is higher than its market capitalisation of RM1.2 billion.
Last week, the government imposed a two-year freeze on toll hikes. However, this will not have an impact on most of the toll concessionaires because their scheduled toll hikes do not fall in 2005 and 2006.
“The government’s recent decision to freeze toll-rate hikes for the rest of this year and 2006 is not expected to have any impact on the credit profiles of the toll-road concessionaires rated by Rating Agency Malaysia Bhd [RAM]. None of the 10 toll road concessionaires currently rated by us have any scheduled rate increases due within this period,” says RAM.
The 10 toll concessionaires rated by RAM include PLUS, Penang Bridge Sdn Bhd, Besraya (M) Sdn Bhd, Elite, Grand Saga Sdn Bhd, Kesas Sdn Bhd, Litrak, New Pantai Expressway Sdn Bhd (NPE), Konsortium Lebuhraya Butterworth-Kulim Sdn Bhd and Sistem Lingkaran Lebuhraya Kajang Sdn Bhd (SILK).
While Penang Bridge had proposed a toll hike in August in lieu of its scheduled toll hike in 2003 that was rejected by the government, RAM said the move to freeze toll increases would not affect its credit rating. This is because the government has been paying compensation, amounting to some RM19 million a year, to Penang Bridge after it denied the toll rate hike two years ago.
Other toll operators not rated by RAM, such as MTD Prime Sdn Bhd and Sistem Penyuraian KL Barat Sdn Bhd (Sprint), are also not scheduled to raise toll rates in 2005 and 2006.

Will this spark acquisitions?
MHA’s move to determine the value of the concessions will certainly give rise to speculation of possible acquisitions involving highway operators.
While the profitable operators will seek a higher value for their concessions, the non-profitable ones will look at it as an opportunity to exit the business.
Only the older toll roads that have mature traffic flow are operationally viable. Most of the new highways are not viable as they have not achieved the expected traffic numbers, among them Sunway Infrastructure Bhd’s SILK. The company is looking to restructure SILK’s bonds amounting to RM580 million.
Other new highways that aren’t exactly meeting traffic numbers are the NPE, SPRINT and the stretch from Karak to Kuantan under MTD Infra. However, the shortfall along these highways is said to be not as far off traffic flow forecasts when compared with SILK.
Even on the North-South Expressway, observers point out that the most lucrative stretch is from Ipoh to Melaka. “The other stretches do not really have enough traffic flow to sustain the cost of maintaining those portions, for instance, in the northern region,” says an observer. While the concessionaires, on the face of it, are making money from the highways, the bulk of the profits go towards loan repayment.
Morever, returns from operating the highways are not that attractive most of the time, says an observer.

STOCK - MTDINFR

Stock : MTDINFR (9768)
Full Name : MTD Infraperdana Bhd
EPS (cents) : 2.71 (2006); 3.28 (2005)
NTA (RM) : 0.74
Price (RM) : 1.12
Div (RM): 0.02 (2006); 0.02 (2005)
PE : 41 (2006)
DY : 1.8%
Recommend : BUY


Looking at the price movement of LITRAK (6645) from RM2.9x to RM3.6x, apparently market has started to price in the effect of the toll hike that took place since 1st January 2007. However, there is another counter which is also the “beneficiary” seems being ignored by the market. Its share price has hardly moved even though our KLCI has broken its historically height – it is MTD Infraperdana (9768). I hold MTD Infraperdana and strongly believe there is much upside in this counter due to the following reasons:
Toll concessionaire for KL-Karak Highway, East Coast Expressway 1, East-West Link Expressway and KL-Seremban Expressway.
Increasing new residential areas in Cheras, potential 9MP projects in east coast and Visit Malaysia Year 2007. East-West Link Expressway is one of the most heavily used road toll in KL, providing the direct link between Cheras and PJ (Federal Highway). 9MP projects in east coast will contribute higher traffic volume in ECE1. The company will also benefit from the VMY2007, as more tourists will go to Genting Highlands using KL-Karak highway.
Capital repayment of RM0.35. Based on the previous capital repayment experience, I will expect the RM0.35 capital repayment date to be formally announced in two month’s time.
Heavy repair work expected to end by 2H of 2007. This will free up additional cash flow for future cash distribution.
High borrowing? Not a major concern. Though the latest MTN issued in March 2007 balloons the company’s borrowing to RM1.2b, the operating cash flow of approximately RM100m per year is more than sufficient to cover (the concessionaire still has more than 20 years to go).
MTD Capital needs capital to fund overseas projects, especially in those riskier countries such as Indonesia. Most bankers reluctant to give out loans on risky projects. One of the alternatives that MTD Capital can source capital will be having its subsidiary MTD Infraperdana to distribute cash. As a minority shareholder, we can benefit indirectly (refer to BJTOTO’s case).

The DY may looks low now, but as mentioned the management is capable to declare higher dividend due to the toll hike and upon the completion of heavy repair work. Since the downside is limited, I would recommend MTDINFRA a BUY at RM1.11

批发商不满稻米局无书面通知 白米悄悄起价

批发商不满稻米局无书面通知　白米悄悄起价
2007-7-5 0:14:53（吉隆坡4日讯）白米起价！国家稻米局（BERNAS）已向国内米商发出通知，各类型的白米将在7月1日全面调涨。据悉有关的涨幅介于5％至8％，同时一些批发商对国家稻米局（BERNAS）在没有发出“白纸黑字”的情况下，擅自调高价格深感无奈！

连兴泉：涨幅5％至8％

马来西亚杂货商联合会会长连兴泉表示，虽然政府并没有作出宣布，不过白米价格却“静悄悄”的在7月1日开始调整价格。

他指出，国家稻米局已经向国内米商发出通知，各类型的白米将在7月1日全面调涨。据悉有关的涨幅介于5％至8％，

他披露，虽然国家稻米局声称，本地白米并没有在这次的涨价风潮中受影响，不过这只是自欺欺人的说法，然而不只是入口白米，就连本地白米也已经涨价。

他认为，由于国内的白米已经被国家稻米局垄断，所以商家根本无法作出任何的“反抗”，只能继续面对涨价的风潮。

“在白米涨价的课题上，我们也是无可奈何！”，他这么说。

除了白米以外，他说，糯米也面对涨价的问题，而涨幅是每公斤2仙。

询及，白米涨价将会对消费者造成怎样的影响，连兴泉自我调侃说：“在百物腾涨的现今，消费者对于白米的涨价也已经感到麻木！”

连兴泉是在接受本报电访时发表针对白米涨价的课题谈话。

据悉，从本月1日开始，白米再次涨价，涨幅介于5％至8％，这也是继4月份后，我国的白米再次调整价格。保守估计，5公斤装的白米，将上涨50仙至1令吉，而10公斤装的白米，则上涨1令吉至2令吉。

根据国家稻米局的消息，由于入口白米的价格不断地攀升，所以白米的价格被逼再次作出调整。不过这次的价格调整并没有涉及本地白米。

稻米局擅自调高米价

消息指出，国家稻米局（BERNAS）是在没有发出“白纸黑字”的情况下，就擅自调高白米的价格，让批发商深感无奈！

本报今日致电国家稻米局，以了解白米在本月1日开始调整价格的问题，不过却没有任何的官员针对这项课题作出回应。

米粮批发商公会未接通知信

大马米粮批发商公会的代表向本报披露，部份的会员已经作出投诉，指国家稻米局在没有发出通知信的情况下，就调高米价，让人感到措手不及。

此外，尽管会员已经获知白米涨价一事，不过公会本身还没有收到来自稻米局的通知信，这确实不寻常。

吴子联不愿置评

另一方面，本报在致电大马米粮批发商公会会长吴子联了解白米涨价的进展时，他则以开会为由，而拒绝对白米涨价一事发表谈话。

何襄赞：未接获消息

此外贸消部政务次长拿督何襄赞在接受本报电访时也提到，他对于米价价格开始在本月进行调整一事没有接获消息，所以不能发表任何的谈话。

他说：“过去数天我都留在国会，所以对于白米涨价一事不是很了解。”

他将会尽快向部门了解白米涨价一事。

bernas nayang

更新: April 19, 2007 23:17

宏德增持股權
國家稻米開高走低
（吉隆坡19日訊）港商宏德（Wang Tak）增持國家稻米（BERNAS，6866，主板貿易）股權，激勵后者股價今日一度揚升。

國家稻米以微揚1仙迎市，報2.03令吉，惟后勁不足，作價盤中窄幅滑落。

休市時，該股暫以2.01令吉掛休，微跌1仙，半日成交量32萬200股。

午盤期間，國家稻米表現平平，全日作價徘徊在2令吉及2.03令吉之間。

持股17.45%

閉市時，該股同報2.01令吉，成交量72萬3500股。

據《商業時報》報導，相信宏德被大馬米商控制，繼續增持國家稻米股權。

另外，報導還說，大股東丹斯里賽莫達或私有化國家稻米。

該報曾在去年12月份報導說，賽莫達私有化計劃已近完成階段，惟賽莫達稍后作出澄清，並否認報導屬實。

宏德自去年開始大量買進國家稻米股權，並在12月份，持有股權高達12%。

根據馬證交所本月報備文件，宏德增持國家稻米股權至17.45%，去年同期的持股權僅達7.15%。

雖然賽莫達沒有出現在股東名單內，惟相信他是透過Budaya Generasi有限公司，持有國家稻米30.79%股權，成為最大的股東。

另外，他也透過Serba Etika有限公司，持有國家稻米6.46%股權。

bernas

WE hear often enough about how business is not all about the pursuit of profit. How many times have we been told that it's not only the owners who feel the impact of a business decision? That's why people increasingly prefer the term “stakeholders” to “shareholders”.

Perhaps nowhere is this need to temper earnings enhancement with broader responsibilities more acutely felt than at an enterprise that was once a government unit.

While retaining its social obligations, a privatised business is expected to be commercially successful. And when the company is listed, this duality deepens because so much is subject to scrutiny. How does the company protect and fatten its bottom line without creating widespread resentment?

That's a question that the management of Padiberas Nasional Bhd (Bernas) must surely grapple with all the time. The recent brouhaha over its decision to increase the price of rice – the Government subsequently stepped in to reverse the move – underscores the point that Bernas is not like most other listed companies.

Following the privatisation of Lembaga Padi dan Beras Negara in January 1996, Bernas took over the former's role as the custodian of Malaysian paddy and rice industry.

In its annual reports and on its website, Bernas clearly outlines its double identities when it describes its principal activities. On the commercial front, it is basically a rice importer (the only licensed one in Malaysia) and distributor.

At the same time, as part of its privatisation agreement with the Government, the company must “ensure the maintenance of the sufficient supply of rice at reasonably fair and stable prices”.

It does this by maintaining the national rice stockpile, distributing subsidies to paddy farmers on behalf of the Government, managing the Bumiputra Rice Miller Scheme and acting as a buyer of last resort of paddy at the guaranteed minimum price.

In addition, there's a political dimension to Bernas' social duties because the country's granaries are in the Malay heartlands.

All this means that the company's business operations affect a security crop and a staple food. There are national interests at stake. Any attempt to raise its selling prices may potentially lead to a nationwide uproar because such a step affects practically everybody in Malaysia.

And so it did when Bernas announced the hike from July 1.

In the opening sentence of his letter to shareholders in the annual report 2006, Bernas chairman Datuk Syed Abdul Jabbar Syed Hassan referred to “the challenging business environment of escalating fuel prices, rising cost of paddy production and increasing international prices of rice”.

Based on news reports, the price increase took the Government by surprise. Agriculture and Agro-Based Industry Minister Tan Sri Muhyiddin Yassin said under the privatisation agreement, Bernas was obliged to consult the Government before the prices could be raised.

It is understood that Bernas had raised prices before this. The difference this time around was apparently that it was done without the authorities' approval.

If this is so, it is a highly unusual occurrence. It is hard to imagine something like this happening at another listed privatised company such as Tenaga Nasional Bhd (TNB), Telekom Malaysia Bhd (TM) and Malaysia Airports Holdings Bhd (MAHB).

For example, despite agonising cost pressures, TNB had to wait for years before the Government agreed to a tariff hike.

Electricity and rice are vastly different, of course, but there's no doubt that the delicate social-commercial equilibrium applies for Bernas as much as it does for TNB. One thing that sets apart Bernas from the other listed privatised businesses is its shareholding structure.

TNB, TM and MAHB have Khazanah Nasional Bhd as a substantial shareholder. Khazanah is also a key shareholder for other listed companies whose businesses are arguably entwined with national interest. These include MAS, Proton Holdings Bhd and UEM World Bhd.

There are a number other Government-linked organisations, such as Petronas, Permodalan Nasional Bhd, the Employees' Provident Fund and Lembaga Tabung Haji, that have big stakes in companies that to some extent, have an influence over business and life in Malaysia.

The argument here is that the presence of these organisation as major shareholders and in the boardrooms helps ensure that the companies are run in line with national interests.

On the other hand, the three top shareholders of Bernas are Budaya Generasi (M) Sdn Bhd (30.79%), Wang Tak Co Ltd (17.58%) and Serba Etika Sdn Bhd (6.46%). Budaya Generasi is linked to tycoon Tan Sri Syed Mokhtar Albukhary, while Wing Tak is a wholly-owned subsidiary of the Hong Kong-listed Lee Hing Development Ltd.

Lee Hing's two longest-serving directors are corporate figures in Malaysia – chairman and managing director Tan Boon Seng and non-executive director Ang Guan Seng. Tan is executive director of IGB Corp Bhd, while Ang is managing director of Petaling Garden Bhd.

Not that there's zero Government involvement in Bernas. Through Minister of Finance (Inc), the Government holds a special rights redeemable preference share in Bernas. As the name suggests, this golden share allows the Government to exercise veto powers in certain situation so as to protect public interests.

MOF (Inc) is represented on the Bernas board by Datuk Dr Zulkifli Idris, the secretary general of the Agriculture and Agro-Based Industry Ministry, and Azman Umar, a senior Finance Ministry officer. Each of them has an alternate director.

Given that the Government had not been informed earlier, it looks like the entire board of directors had not been party to the latest decision by Bernas to raise the price of rice.

Bernas may well have strong grounds for the price hike. However, the controversy has not done any good to its goodwill and can be a hindrance to future bids to increase prices. Consumer and investor confidence is fragile. Much can be learnt from the experience of the Khazanah-controlled listed companies.

www.biznewsdb.com

比亚迪电子（0285.HK）

由比亚迪（1211.HK）分拆而来的比亚迪电子（0285.HK）已于上周五启动路演。

　　消息人士透露，主要从事手机零部件及模块业务的比亚迪电子计划以每股10.75港元～14港元发行5.5亿股，其中2.2亿股为旧股，IPO集资额约为59.13亿～77亿港元。公司将于本周五公开招股，股份股份预期12月20日上市，保荐人为瑞银。

　　有报道称，比亚迪电子此次发行价区间已经较早前下调了15%，原因是近期市况较为波动。据悉，比亚迪电子原先招股区间相当于2008年预测市盈率17倍～20倍，最新招股价则相当于2008年预测市盈率13.6倍～14.7倍。

　　据初步招股文件披露，比亚迪电子预测今年净利润将不少于10.9亿元，较去年同期的7.31亿元增长49%。今年上半年净利润为4.46亿元，同比大幅增长1.46倍。保荐人报告预测，该公司明年盈利将进一步上升至16.6亿元，估计来自诺基亚收入将会继续增加，同时该公司亦会加强与其它手机商的合作，例如摩托罗拉和三星等。比亚迪电子去年及今年上半年最大客户是诺基亚，占收入比例分别为53.5%及76.4%。

　　比亚迪电子计划上市集资最多77亿港元，其中约35%用作扩充手机部件及模块业务；约30%用作扩充生产塑料金属零部件所用模具的设计及制造产能，约15%用于扩充金属零部件设计及制造产能。
(责任编辑：吴妍丽)