We believe there is a strong likelihood that core expressways’ traffic volume could come in higher than our forecast, as:
1) FY12/10 traffic volume will be cushioned by the strong 9.8% growth registered in Jan-May 10; and
2) the strong 28.6% growth registered in passenger car sales in Jan-May 2010 will help boost PLUS’s traffic volume growth in the remaining months.
To pre-empt the higher-than-expected traffic volume, we are raising our FY10 traffic volume growth assumption from 3% to 4%.
While the new accounting guidelines from the MIA will likely require concessionaires (including PLUS) to switch their amortisation method from “revenue method” to either “straight line” or “use of volume” method, PLUS is still hopeful that it could continue to adopt “revenue method”.
RHB Equity 360° - 15 July 2010 (PLUS, TNB; Technical: IJM Corp)
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