Investors sell down toll concessionaire shares

INVESTORS sold down shares of some of Malaysia's biggest highway concessionaires yesterday, on concerns that profits would be hurt if the government lowered toll rates.

Analysts said this was in knee-jerk reaction to Works Minister Datuk Mohd Zin Mohamed's comments on Wednesday that the government would review all highway concessions in a bid to reduce toll charges.

Shares of PLUS Expressways Bhd, which holds the North South Expressway concession among others, fell by 3.7 per cent to close at RM3.10, its biggest single-day drop in seven weeks.

Shares of Lingkaran Trans Kota Holdings Bhd (Litrak), which owns the Lebuhraya Damansara-Puchong (LDP) toll concession for up to 2031, fell by 5.2 per cent to RM3.82 during the day.

It, however, recovered to close at RM3.82, two sen higher than on Wednesday's closing.

"People are worried the government will force the concessionaires to lower the toll rates. But we don't think it's going to be possible to do this as the agreements are all in black and white," said Kamarulzaman Hassan, an analyst at TA Securities.

Lower toll rates are "a far fetched idea" unless the government is willing to compensate the concessionaires, he said.

He is maintaining his "buy" recommendation on both PLUS and Litrak.

Litrak, nevertheless, said it was concerned by the latest development.

"We are concerned, but our negotiations with the government have always been fair in the past and I don't see why it shouldn't continue to be so," a company official told Business Times.

He said the LDP's next scheduled toll hike is not till 2010, when rates are meant to go up to RM2.10 from RM1.60 now.

Litrak was to have raised its rates in January 2007 but the government did not allow this and had to compensate the company, as per the concession agreement.

Litrak was compensated partly in cash and partly through an extension in the concession, the official said.

Other highway concessionaires fared mixed on the stock market yesterday. IJM rose 40 sen to RM5.90, Gamuda rose 2 sen to RM3.16, MRCB fell 2 sen to RM1.63 and MTD Capital closed unchanged at RM3.28.

By New Straits Times (by Adeline Paul Raj and Sharen Kaur)