dividend yield

 
 

Toll hike freeze seen as ‘mildly positive’ for concessionaires

PETALING JAYA: TA Securities views the toll hike freeze on 21 highways across the country next year as mildly positive for toll concessionaires, as the operators can avoid traffic reduction arising from higher toll rates imposed on road users.

In the past, toll highway operators typically experienced a slight decline in traffic volume immediate after a toll rate increase, followed by a gradual recovery in traffic volume as demand for toll roads is largely inelastic, it said in a note last Friday.

Additionally, it said, the toll operators will receive compensation from the government to cover the difference between entitled toll rates under the concession agreements and the actual toll rates charged on end-users.

However, on a broader outlook, TA Securities said, the toll concessionaires are still surrounded with uncertainties following the change of government, noting the Pakatan Harapan government is studying the best method to fulfil its 14th general election manifesto promise.

Last Thursday, the government announced its decision to freeze all toll hikes on 21 highways for all vehicles which are eligible for an increase in 2019, as well as a toll increase freeze for buses on eight highways, and the abolishment of motorcycle tolls.

Earlier this month, the Works Ministry said it would appoint an independent auditor in January to assist the government in preparing data analysis and recommendations, including reduction of toll rates in the short, medium and long term, and eventually abolishing toll collection on all expressways.

The analysis of the results is expected to be ready by May.

“With a reduced upside after a rebound in share price, we downgrade Lingkaran Trans Kota Bhd (Litrak) from ‘buy’ to ‘hold’, with an unchanged target price of RM4.54,” TA Securities said.

Separately, MIDF Research said it maintained its “buy” call for Litrak with an unchanged target price of RM4.92 per share, saying the toll operator is still a defensive player with decent dividend yield of 7.3% for financial year 2020 (FY20).

Litrak, which operates the Damansara-Puchong Highway (LDP) and the Sprint Highway, closed unchanged at RM4.11 on 33,800 shares done last Friday.

MIDF Research said that following the freeze on toll rate increases, compensation by the government to Sprint will rise as the Penchala toll plaza is due for a rate hike in next year.

MIDF Research estimated that the overall compensation to Litrak is set to increase to above RM170 million in FY19 and FY20 while earnings contribution from the concessionaires will be unchanged.

However, it said there will be no changes in compensation for the LDP as the toll rates remain unchanged.

“As our current traffic volume and earnings forecasts have taken into account the freeze of toll hikes on intra-city tolls in the country for 2019 as per the Budget 2019 announcement, we are maintaining our earnings estimates at this juncture,” MIDF Research added.


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7 sen income distribution for ASB, 3.25 sen for ASN

KUALA LUMPUR: Amanah Saham Nasional Bhd (ASNB) has declared an income distribution of 6.5 sen a unit and bonus of 0.50 sen for Amanah Saham Bumiputera ( ASB) for financial year ending Dec 31, 2018 (FY18). For FY17, ASB made a distribution payout of 7.25 sen per unit comprising a dividend of seven sen a […]


PNB’s AUM up 6.8%, net income at RM15.3b for first 11 months

KUALA LUMPUR: Permodalan Nasional Bhd (PNB), which saw a 6.8% in asset under management (AUM) to RM295.2 billion as at Nov 30, 2018, recorded proforma net income of RM15.30 billion for the first 11 months of 2018.

PNB chairman Tan Sri Zeti Aziz said at a media briefing that the strategy forward is to embark on a more robust risk management and assess investments activities taken on a case-by-case basis against the backdrop of a challenging environment due to moderate gross domestic product growth both domestically and internationally.

She noted that it is crucial to have a diverse portfolio ranging from fixed income, equity, financial and real estate, to spread the investment risk.

“We are also looking at investments with recurring income,” she added.

On paring down stakes in strategic and core companies, Zeti said assessments will be made based on the outlook of the industry and the potential of these companies being restructured with organisational transformation.

She said divestments could potentially be made in parts rather than a blanket one.

PNB plans to undertake a mid-term review of its strategic plan concentrating on the areas of strategic asset allocation, enterprise risk management and organisational transformation as well as to accelerate the diversification of its investment portfolio in higher yielding asset.

PNB’s unit trust management company Amanah Saham Nasional Bhd declared an income distribution of 6.50 sen per unit and a bonus of 0.5 sen per unit representing a total payout of 7 sen for Amanah Saham Bumiputera for the financial year ending Dec 31, 2018.

As for Amanah Saham Nasional, it announced an income distribution of 3.25 sen per unit representing a dividend yield of 5.1% based on the net asset value of the fund as at December 20, 2018.


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Higher fuel cost may dim TNB’s FY18 results: MIDF Research

PETALING JAYA: Tenaga Nasional Bhd (TNB) may see its earnings for the financial year ending Dec 31 (FY18) affected by higher fuel cost, said MIDF Research.

“The higher fuel cost, although technically is temporary until TNB gets adjustments in 1H19 ICPT (Imbalance Cost Pass Through), will impact earnings for FY18 given the delay in recovery,” it said in its report.

TNB reported core earnings of RM1.2 billion for the third quarter ended Sept 30, excluding RM510 million one-offs, bringing its core earnings for the nine-months period to RM5 billion.

During the quarter, the coal cost recognised by TNB rose significantly by 13% quarter-on-quarter. The impact of higher coal price was further compounded by weak ringgit trends while piped gas price was higher in line with the gradual subsidy rollback.

“Additionally, fuel cost was impacted by higher gas in the generation mix which increased to 42% from 39% last quarter. This is due to outages at Kapar Energy and Tanjung Bin coal plants and is temporary. Coal mix is expected to normalise in 4Q18,” said MIDF Research.

It expects fuel cost in 4Q18 to ease slightly given a recovery in coal mix and gradually easing coal price in the spot markets.

The research house noted that TNB’s capital expenditure looks to have peaked with minimal new generation projects in the pipeline and most of the existing projects having progressed well as of 2Q18.

“Jimah East 95% completed, Sepang Solar completed and Southern Power Generation 59% completed. This suggests room for further growth in dividend payout,” it said.

It reaffirmed its “buy” call at unchanged target price of RM16.80 with key catalysts being decent dividend yields of 4.3% while valuations are cheap, peaking capex suggesting room for dividend upside and possible monetisation of backbone fibre asset via partners.

Meanwhile, CGS-CIMB has cut its FY18-20F EPS forecasts by 0.1-7% to factor in higher-than-expected associate losses and a higher effective tax rate.

“We expect the tax rate to continue to trend higher in FY18F due to a reduction in reinvestment allowance. Our target price is revised down to RM14.60 after the earnings adjustment, still based on a 10% discount to sector average FY19F P/E of 14 times to factor in risks from sector reforms,” it said.

CGS-CIMB maintained its “hold” rating on TNB despite the stock being one of the cheapest big-cap stocks in the market.

This is due to earnings risks, as the stable regulated earnings might not be able to offset the earnings downside from the expected step-up in tax rate due to a reduction in reinvestment allowance. It also noted the potential changes in regulations and policies for the utilities sector.

“Although dividend yield is decent at about 4%, we view the weaker earnings and unfavourable macro environment as not conducive to a stock re-rating,” it added.

TNB told analysts during a conference call that the 3Q18 effective tax rate was exceptionally high at 43% compared with 17% in 2Q18, due to lower reinvestment allowance claim. CGS-CIMB expects TNB’s effective tax rate in FY18-19F to remain close to 9M18’s tax rate level of 20%.


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