The "sweeter" toll concession deal by the country's biggest highway operator may pressure other toll concessionaires to do the same but this is easier said than done.
"If the biggest concessionaire can do it, the public would be questioning why can't other toll concessionaires do it," said a research head from a local brokerage.
On Wednesday, new concession terms for four highways, which includes the North-South Expressway, were announced. This includes the Penang Bridge concession.
This comes as UEM Group Bhd and the Employees Provident Fund (EPF) have completed buying all of the assets and liabilities of PLUS Expressways Bhd for RM23 billion.
The terms include keeping toll rates at four major PLUS highways until 2015, lower hikes from 2016 and foregoing some RM6.5 billion compensation from the government.
From 2016, toll rates will be raised by 5 per cent every three years compared with 10 per cent before.
Some analysts reckon that the PLUS deal is unlikely to shake other concessionaires, as their highways may not be performing as well as PLUS highways.
"It is unlikely that other concessionaires will be also revising their terms. At the end of the day, this business is a volume game.
"UEM Group and EPF are able to do that because PLUS has the volume and the PLUS highways are the backbone of the country's expressway system," said Kaladher Govindan, TA Securities head of research.
PLUS announcement did not impact shares of other major concession holders. Gamuda Bhd shares fell 0.3 per cent while IJM shares rose 0.3 per cent yesterday.
Analysts agreed that even if a revised deal was reached, it may not be as sweet as what was offered by UEM and EPF.
"It would not be easy for other concessionaires to revise their terms. For a start, the government will need to extend the concession period of these toll operators. And even if the operators agree to have lower increment, it is unlikely that they will do it without some form of compensation," said another research head.
Another analyst concurred, saying that other concessionaires won't likely be revising their terms as they have to also answer to other stakeholders.
"Being an entity of a public-listed or private company, these companies may be less likely to be too charitable," said an analyst who declined to be named.
For more information, please go to www.pluschannel.com.my
"If the biggest concessionaire can do it, the public would be questioning why can't other toll concessionaires do it," said a research head from a local brokerage.
On Wednesday, new concession terms for four highways, which includes the North-South Expressway, were announced. This includes the Penang Bridge concession.
This comes as UEM Group Bhd and the Employees Provident Fund (EPF) have completed buying all of the assets and liabilities of PLUS Expressways Bhd for RM23 billion.
The terms include keeping toll rates at four major PLUS highways until 2015, lower hikes from 2016 and foregoing some RM6.5 billion compensation from the government.
From 2016, toll rates will be raised by 5 per cent every three years compared with 10 per cent before.
Some analysts reckon that the PLUS deal is unlikely to shake other concessionaires, as their highways may not be performing as well as PLUS highways.
"It is unlikely that other concessionaires will be also revising their terms. At the end of the day, this business is a volume game.
"UEM Group and EPF are able to do that because PLUS has the volume and the PLUS highways are the backbone of the country's expressway system," said Kaladher Govindan, TA Securities head of research.
PLUS announcement did not impact shares of other major concession holders. Gamuda Bhd shares fell 0.3 per cent while IJM shares rose 0.3 per cent yesterday.
Analysts agreed that even if a revised deal was reached, it may not be as sweet as what was offered by UEM and EPF.
"It would not be easy for other concessionaires to revise their terms. For a start, the government will need to extend the concession period of these toll operators. And even if the operators agree to have lower increment, it is unlikely that they will do it without some form of compensation," said another research head.
Another analyst concurred, saying that other concessionaires won't likely be revising their terms as they have to also answer to other stakeholders.
"Being an entity of a public-listed or private company, these companies may be less likely to be too charitable," said an analyst who declined to be named.
For more information, please go to www.pluschannel.com.my
