MTD InfraPerdana net profit forecast upgraded by 4.7%
The Star - By Susan Tam

MTD InfraPerdana Bhd's net profit forecast has been upgraded by 4.7% to RM53mil for its financial year (FY) ending March 2006 due to increasing traffic volume on the East Coast Expressway 1 (ECE1).

ECM Libra Securities Sdn Bhd said the upgrade was due to stronger daily traffic growth of 10% on ECE1 in its first year of operations.

However, subsequent years' expectations have been tuned down from 7% to 5%.

This led to an unchanged forecast of MTD Infra's net profits in FY2007 at RM60mil, while for FY2008 its earnings were downgraded by 2% to RM72mil.

MTD Infra's profit upgrade forecast is also due to ECM Libra's optimism with the synergies expected from the RM245mil acquisition of Metramac Corp Sdn Bhd. This deal is expected to be sealed next month.

Metramac holds the concession for the Sungai Besi Highway (SBH) that is part of the Kuala Lumpur-Seremban highway, and the east-west link (EWL) which connects Kajang to Cheras to Bangsar/KL.

ECM Libra's June report had factored Metramac's six-month contribution into MTD Infra's forecast based on SBH's traffic growth rate of 4.5% and EWL's 2.5%.

But SBH may experience some traffic spillover by the end of 2007 when Gamuda Bhd's SMART tunnel is completed next December.

In addition, due to on-going construction works at Jalan Cheras, current traffic volume on the EWL has been growing close to 10% year-on-year on a daily average basis, but is expected to ease to an average growth of 2.5% per year.

ECM Libra reiterated its “buy” rating on MTD Infra based on its defensive appeal in terms of earning and dividend yield.

Based on a 50% payout policy, ECM Libra expects net dividends of 2 to 3 sen per share over the next three years, translating into decent yields of 2% to 3% per annum.

“However it can potentially be increased up to a 60% payout, which then results in a yield at about 2.7% to 3.6% on a net basis in FY2007 to FY2008 without exhausting its cash reserves,” it said.

ECM Libra has also upgraded MTD Infra's fair value from RM1.16 to RM1.30 (pre-capital repayment) based on a 15% discount to its discounted cash flow value as ECE1's traffic is steadily accelerating and the Metramac acquisition is considered a 90% done deal.

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