EPF To Buy PLUS Expressways?

Is this a scoop? THis was reported in an exciting newish blog named Taikuns & Taikors. It now looks like sensibility has won the day with EPF entering the fray to buy PLUS Expressways. I can so no better solution to that. This toll system is too ingrained to be in private hands. At least now, all profits will accrue to EPF holders.

http://www.tnt.net.my/home

Some twelve million EPF members are in for a windfall as the huge profit stream from Plus will directly boost yearly interest payout to exceed the current average of five percent, though earlier MMC Corp and Asas Serba proposals to buyout Plus are rejected.

The government has given the nod for the Employees Provided Fund to acquire Malaysia's largest tolled highway operator, Plus Expressways Bhd, putting an end to the attempts of two private companies to take over the Khazanah-owned entity.

EPF’s late-entry acquisition pips the proposals made separately by Tan Sri Syed Mokhtar Al-Bukhary’s MMC Corporation Bhd and Tan Sri Halim Saad’s Asas Serba Sdn Bhd to buyout Plus through Khazanah Nasional Bhd, which directly owns 16.74% of Plus and has an indirect stake of 38.51% via UEM Group.

Raising the roughly RM11 to RM12 billion to pay for the 55% of Plus shares now in Khazanah’s hands is considered as “loose change” as EPF has RM402 billion in total asset allocation as at March this year and would not require the pension fund to resort to the debt market.

Plus Expressways Bhd announced a traffic volume of 1,281.4 million Passenger Car Unit kilometer (PCU-km) in July, up four per cent compared with the same period last year.

PLUS manages the North-South Expressway, New Klang Valley Expressway, Federal Highway Route Two and Seremban-Port Dickson Highway.

For the seven-month period ended July 30, traffic increased nine per cent to 9,916.7 million PCU-km from the previous corresponding period.

Meanwhile, its ELITE (North-South Expressway Central Link) subsidiary recorded 137.8 million PCU-km in July, an increase of 10.1 per cent from the corresponding period.

Year to date, traffic rose 13.6 per cent to 911.4 million PCU-KM against the the same period last year.

Read more: Plus Expressways posts 4pc traffic growth http://www.btimes.com.my/Current_News/BTIMES/articles/20100830182238/Article/index_html#ixzz10Sw1D41v

The shifting of a large chunk of a government controlled asset from one institution to another, is seen as the end of strategic assets being placed in the hands of individuals and ushering a new era of compliance on public accountability.

At a stroke, some 12.7 million EPF members will enjoy a windfall, as analysts compute the added cash flow from Plus to EPF will see its members gaining an extra one or two percent in annual interest payout from the present average of 5 percent.

In recent weeks there has been an unprecedented surge in the share price of Plus, touching its all-time high recently of RM4.32 on September 1 from its 52 week low of RM3.20.

Commenting on the government’s move to shift a strategic asset from one institution to another as it matures, in this case transferring Plus from Khazanah to EPF, a senior local banker said, ”It really is a way of sharing corporate profits directly with the public so people can gain from well run business operations within the government stable.”

A stock analyst familiar with the deal adds that the government has taken a lot of brickbats in the past for awarding contracts to individuals and this move marks the end of an era of placing strategic assets in the hands of individuals.

“Almost all the past corporate debacles stemmed from individuals being trusted to manage national assets or assets of strategic importance. However, a mix of over-gearing and perhaps, over-ambition, led to their eventual failure which saw the government being forced to bail them out.

“In fact, Plus was once under the Renong Group and Khazanah was asked to take it over, rehabilitate the company and put in place a strict code of corporate governance.

Plus today is a really top-notch operation that is rated one of the world’s top five tolled highway operators.

“From Putrajaya’s viewpoint, it makes sense to transfer Plus to another state institution that pays out dividends directly to millions of Malaysians. We have to see this as a signal from the present administration that they are using a fresh approach to pass on profits generated by state-controlled companies to the man-in-the-street.

At the same time, the old practice of awarding large-scale state assets to individuals has come to an end,” he said.

The Plus purchase caps an acquisition spree by EPF which saw it take control of property developer MRCB and bank holding company RHB Capital, as a means of controlling large-scale profit generators to pay out a steady dividend pipeline to its members.

Need A Few More Great CEOs For GLCs

What's the difference between a good CEO and a great one? In Malaysia there are not many great CEOs for sure. Many of our top companies are still family controlled companies, and generally its very rare to get family members that are also great CEOs. Family owned enterprises are usually started by a great entrepreneur but as you mushroom into a listed company, many have problems in letting go. An entrepreneur may be able to build a business from scratch to earning RM50m profit a year, but as you expand and scale up, you need a professional person with the vision and execution ability to bring the company to the next level. Ask many CEOs, they don't even talk about what is the next level.



If you put it to a vote, Nazir Razak should probably come in as the best CEO Malaysia has seen for the past 20 years. All you have to do is to track where Bumiputra Commerce Bank was at 10 years ago. If you put that side by side with Maybank, Affin, heck even Public Bank ... the trajectory and the path taken was so different.

Its just a coincidence that CIMB is now a Khazanah owned company. Even with the recent GLC transformation programme, we still see a dire lacking in the top honchos when compared to Nazir.

Let's cut to the chase, what makes a great CEO?

1. Integrity: Always do the right thing regardless of sentiment and never compromise your core values. If you cannot build trust and engender confidence with your stakeholders you cannot succeed. No amount of talent can overcome illegal, immoral or otherwise ill-advised actions.

2. Courage / Excellent Decision Making Skills / Decisiveness: As a CEO you will live or die by the quality of the decisions you make. These decisions are like the ship's mast, every bit that you do steers the ship in a certain direction. He/she must also know when to back down and be able to accept it when he realises its a mistake.

3. Ability to Focus: If you cannot focus you cannot perform at the level necessary to remain in the C-suite for very long. The ability to do nothing more than understand, and lock-onto priorities will place you in the top 10% of all executives.

4. Leveraging Experience: Inexperience, a lack of maturity, needing to be the center of attention, not recognizing limitations, a lack of judgment, an inferior knowledge base, or any number of other common mistakes made by rookie CEOs can cause your house of cards to fall. If you don’t have the experience personally, hire it, contract it, but by all means acquire it. Great CEOs surround themselves with tier-one talent and the best advisors money can buy. They don’t make uniformed or ill-advised decisions in a vacuum.

5. Command Presence: Great CEOs possess a strong presence and bearing. They are unflappable individuals that never let you see them sweat (unless of course it serves a purpose). Everything from how they carry themselves to how they speak and dress messages that they are in charge.

6. Embracing Change: Great CEOs have a strong bias to action. They don’t rest upon past accomplishments and are always seeking to improve through change and innovation. In today’s fast paced and competitive environment those CEOs who don’t openly embrace change will often be shown the door prior to the expiration of their initial employment contract.

7. Brand Champions: Great CEOs understand branding at every level. They seek to build not only a dominant corporate brand, but also a strong personal brand. CEOs that are not well branded on a personal basis, or who let their corporate brand fall into decline will not survive.

8. Resourcefulness / Boundless Energy: Great CEOs have a boundless amount of energy. They are positive in their outlook, and their attitude is contagious. A low energy CEO is not motivating, convincing or credible.

9. Business Acumen: Great CEOs have a deep understanding of the business and a strong orientation toward profit. Great CEOs possess what often appears to be a sixth sense or an almost instinctive feel for what the company needs to do to make money and remain competitive.

10. People Acumen: Great CEOs have a nose for talent…They understand how to recruit, develop and deploy talent while focusing on applying the best talent to the best opportunities. They also know when it’s time to make changes and cut losses as needed.

11. Organizational Acumen: Great CEOs know how to engender trust, know when and how to share information, and are expert listeners. They develop strong and positive corporate cultures driven to performance by aligned motivations. They can quickly diagnose whether the organization is performing at full potential, delivering on commitments, and whether the company is changing and growing versus just operating.

12. Curiosity: Great CEOs possess a powerful motivation to increase their knowledge base and to convert their learning into actionable initiatives. They question, challenge, confront and are never accepting of the status quo.

13. Intellectual Capacity: Great CEOs are also great thinkers both at the strategic and tactical level. They are quick on their feet and know how to get to the root of an issue faster than anyone else.

14. Global Mindset: Regardless of the geographical boundaries of the current business model great CEOs think globally. Limited thinking results in limited results. Whether global thinking is applied to capital formation, supply-chain issues, business development, strategic partnering, distribution, or any number of other areas, those CEOs who don’t grasp the importance of thinking globally will not endure. Great CEOs are externally oriented, hungry for knowledge of the world and adept at connecting developments and spotting patterns.

15. Never Quit: Great CEOs refuse to lose…They have an insatiable appetite for accomplishment and results and while they may reengineer or change direction they will never lose sight of the end game.

16. Execution: The decisions and strategy of a CEO will only be as effective if they have the implementation and monitoring skills to execute ideas and follow through. The great CEOs will only recruit managers that has proven themselves time and again in seeing through a project or transmitting a vision into reality effectively.

17. Not Staying Still: Too many CEOs end up just managing their companies in the same pond. Great CEOs will always be aware of the need to move up to the next level. Always be concerned about your business model and platform of activities, building initiatives or recruiting talent to scale up the business.

18. Fair: Too many CEOs are just intent on finding ways to reward themselves. A great CEO will devise ways to reward performers in a big way. Loyalty can only go so far. To build great companies, you need a core team that is well rewarded to see through the long term vision, and be paid well in the process. You cannot build value into the company when talent keeps going out the door - there has to be continuity.

19: Empowering / A Strong BoD: You need to have a fair and strong board of directors and not staffed by cronies. You can have a great CEO but he/she will not be effective if the BoD gets in the way. The BoD is there to oversee not micro manage. Just as a great CEO will be able to empower talented employees to achieve greater heights, so too the BoD must empower the CEO to do his/her job.

20. Foresight: Great CEOs are prepared to create their own luck by cultivating an ability to see opportunities for their company and to make the deals that convert those opportunities into realities. Some things that may seem like amazing foresight are actually the result of the hard work and discipline it takes to constantly look forward to build a successful company. Great CEOs must also constantly develop new products to build and retain a customer base. Foresight is also the ability to hire and retain the right people, looking ahead toward the growth of the company.

Nazir scores brilliantly in almost every category (no, I am not putting myself up for a job at CIMB). If only we have another 4 Nazir Razaks to turn things around faster. Food for thought. If we have another 4 Nazirs, what would he be doing at these 5 GLCs??? I would exclude him from some GLCs because there might be very little he can do there, such as Tenaga or Malaysia Airports. I also would not put him at Maybank as the stegosaurus will take too long and too much work to turn around. I will select the 4 GLCs that I think will benefit the most:

1) UEM World / Iskandar - I think the Nusajaya project started way before the two Singapore IRs. The bloody casinos are up and running and where are we??? Oops, forget about the Middle East partners now, let's look to China and India. Execution, execution, timeline, goalposts, rollout scheduling, ... for every project delays there will be 1,001 excuses, and therein lies our problem, we are always ready with excuses. I think Nusajaya is a brilliant concept, but seriously, I hope its not taking another 10 years to rollout, by that time I think Indonesia may have transformed Batam into another Nusajaya already with a bridge linking up both islands.

2) Proton - It will be a short stay for Nazir at Proton. Just sell the thing to another major car maker that can carry the platform we have and leverage on it. We take a minority stake say 30% and just let the thing run by someone else that have the regional or global marketing, design, distribution and cost efficiencies to run this thing. Close shop.

3) PLUS - As it is, PLUS is already Asia's largest listed expressway owner and toll operator, easily beating out the two listed Chinese firms in HK. Its an under leveraged vehicle. Nazir will come in, start up a "financing unit" within the firm to tap bonds and capital to buy, invest, build new tollways all across Asia. Its all a matter of "funding the thing" properly. Nazir will keep enlarging the portfolio by hiving off profitable tollways into REIT like instruments to free up capital. PLUS will be 3 times the size of what it is now within 3 years. Macquarie Infra here we come.

4) Sime Darby - Nazir will do wonders here. Just break off the plantation unit and rethink the business model. Why are we just in palm oil??? Sell huge plots of land to Sime Property and hive that off as an independent unit as well - I am sure Nazir will buy IJM Land and SP Setia and roll them all into a proper behemoth with a lot of claws and market edge.



p/s photos: Ririn Dwi Aryanti

This Doesn't Sound Right

Read this over the weekend in The Star. Was flabbergasted. The audacity to even think of such a move. Considering the feelings of the general public, this is a pretty silly proposal. My views after the article.
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RM26bil bonds poser on takeover of toll concessions.

LITTLE known Asas Serba Sdn Bhd claims it had submitted a proposal in May to seek approval from the Government to take over all the toll concessionaire companies in the country. That’s 22 toll concessionaires in the country with the cream of the crop being PLUS Expressways Bhd, which is in the UEM Group Bhd stable. It is a clever plan to take over all the highways and their pledge is that they will bring down toll rates by 20% and maintain that rate level for the remaining of the concession period.

But the proposal raises questions – how will it fund the acquisition, has it taken into consideration the RM26bil worth of bonds that have been issued by all the toll concession companies, and what would it offer as a solution to bottlenecks on urban highways?

At this point there are more questions than answers and many wonder why Asas has come up with a plan when the Government also has plans to take PLUS private. Is there a correlation or is this a mere opportunity to buy the assets? Of course the Government and PLUS have denied seeing any proposal from any party. Not many analysts are convinced that it will be easy for Asas to take over all the assets.

It was reported yesterday that Asas, a special purpose vehicle, had submitted a plan to the government, presumably the Finance Ministry, to take over all the toll concessions in the country. It was reported that Asas was represented by Datuk Syed Md Amin Aljeffri, chairman of the Kuala Lumpur Malay Chamber of Commerce (KLMCC), Ibrahim Bidin, the president and chief executive officer of Pinelabs (M) Sdn Bhd and former chief operating officer of PLUS, Wan Kamaruddin Wan Mohamed Ali, a former director of Babcock and Brown and Fieldstone International, and Syed Budriz Putra, chief executive officer of Sepang Aircraft Engineering Sdn Bhd.

Calls to Syed Md Amin went unanswered.

The Government, according to Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop, who also heads the Economic Planning Unit, is looking for the best option to take PLUS private. He said the proposal was in its final stages before it was submitted to the Cabinet. The Government, via its investment agency Khazanah Nasional Bhd, has a 63.87% stake in PLUS, which is said to be worth RM10.5bil at current market value.

Besides that, another 22% of PLUS is held by other Government institutions such as the Employees Provident Fund, PNB/Amanah Saham, which means the government controls 84% of PLUS currently. If the Government is set to take PLUS private, will it consider Asas’ proposal? The Government has to fork out an estimated RM7.7bil if it were to buy the remaining shares in PLUS it does not own.

This is based on PLUS’ closing price yesterday of RM3.32 a share, plus a 30% premium for 1.8 billion shares from the non Khazanah block. That is a lot of money to fork out to buy assets that do not create new jobs nor has any multiplier effects on the Malaysian economy unlike the building of new highways. Those funds could be used to build alternative routes for some of the choked intra-urban highways.

About 10% of the current shareholders of PLUS are foreigners and that means billions of ringgit will flow out of the country if Malaysia’s biggest toll operator is taken private. If there is indeed a proposal from Asas to take over all the highways, then there may also be pressure on the Government to do the same for other companies. All this is going to cost the Government billions, perhaps it would be more cost effective to have a bullet train criss-crossing the country than buying up highways as the bullet train will create more economic activity.

An expert noted that “if the Government takes over PLUS then it can forget about the handsome dividends it gets and all the revenue from toll collection would be used for debt repayment and operations and maintenance of the highway.” The expert believes that instead of the Government buying up highways, it should instead be looking at reviewing and capping toll rates, as well as revisiting the agreements made with the road toll operators. The Government should also look at finding alternative routes to ease congestion, the expert said.

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My views:

a) taking toll roads private should not be encouraged, in particular when PLUS is about the biggest toll road company in Asia, it is a significant and interesting vehicle to foreign funds, it adds to the allure of listed Malaysian stocks ... you don't want to keep taking interesting stocks off the table, first Maxis, now PLUS, what next??? YTL, IOI, Commerce???

b) how can you privatise 22 toll roads and ensure a 20% drop in toll charges ... are you saying you can maintain the same charges forever, of course not, you will have to raise toll rates sometime again in the future, and thats when the public sentiment will come back to bite the government, ... do not create the situation where so many are going to be so pissed off by so few.

c) the only way I can privatise 22 toll roads, drop tolls by 20% and not raise them for 5 years is if I get to privatise these toll operators VERY CHEAPLY, i.e. below market prices.. hell if the purchase price is low enough, I may be buying PLUS that will be yielding me 20% now... of course no need to raise rates then, can even lower them, but that is not an equitable proposal for shareholders, and the only way it will happen is if the government forces its hand and sell cheaply = the public selling these assets cheaply to the few.

d) if the government is really wanting to deal effectively with tolls and pacify the public, then get EPF to privatise, at least it will be owned by the public, and EPF always complaining of not enough decent assets to invest in, this can generate stable dividends, even if you have to raise rates, ppl won't be so mad as it flows back to them via EPF, EPF should target an anual return via dividend of 6%-8%, if it can get that, no toll rate hike, easy peasy...

e) just do the math for PLUS, it has a market cap of RM16.6bn and net profits for first half was RM509m (annualised RM1.018bn). To get a 6% rate of return, net profits need to be RM996m, so taking that line of logic, EPF can take this on, particularly since their debt mgmt exercise dragged down profits a bit which will rework itself to higher profits in future interims. On 16 sen DPS, it it giving a net yield of 4.9%, assume no growth in toll rates after EPF privatisation, the dividend yield will move much higher just on organic traffic growth. Operating cash flow is already past RM1bn, so EPF can and should take this on - isn't it wonderful if EPF takes it over and gives a guideline to PLUS that if they give EPF an annual net dividend of 6%-8%, there will be no toll rate hikes - I think the general public will celebrate this. ... On the same logic, how the new vehicle can drop rates by 20% is beyond me, who will fund such a thing when its netting around 3% for PLUS a year??? Surely they will have hike rates up significantly sometime in the future, and the government will have to come in and guarantee the RM26bn. If the deal is palatable, just do it via local and foreign banks and see if they bite with no guarantee, if they do, then by all means go ahead.

f) IF and its a big IF, IF you can drop toll rates by 20% like what Asas Serba is saying, by taking them private... ALL THE MORE REASON THIS DEAL SHOULD BE DONE BY EPF and not just by a few individuals.



p/s photo: Ziana Zain

Why PLUS Should NOT Be Privatised

Fair is fair, it was DAP's idea first to privatise PLUS. The idea isn't new at all, it has been around the markets for years, though some would take the idea and post it as his own without acknowledging where he got the idea. Now MCA has joined in the fray. To the public, its a very persuasive move, politically and economically, as it would relieve the burdens on the general public and negates the ill-will from having to continually approving toll rate hikes every now and then.

I think the calls for PLUS to be privatised are short sighted and a quick fix, and that we are attacking the wrong issue. Tolls will never be greeted as a nice thing. In all countries, the feeling is mutual. Why is it that some users in certain countries are kind of OK with it but some countries will show more anger and displeasure with tolls?

The following excerpts detail the plans by DAP and MCA. My view on the whole thing is in purple below.


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What Is PLUS - The principal activities of PLUS are investment holding and provision of expressway operation services. Its wholly-owned subsidiary company is involved in the operation and maintenance of a tolled expressway network. PLUS is the largest listed expressway operator in South East Asia in terms of toll receipts. The company holds the concession to operate and maintain 848 km of expressways in Malaysia with the expiry date on 31 May 2030. The three expressways of PLUS, comprising the 797 km North-South Expressway, the 35 km New Klang Valley expressway and a 16 km section of the Federal Highway Route two, represents about 69% of the total length of Malaysia's toll expressways in operation. In addition, PLUS operates 67 toll plazas, 78 interchanges, two overhead bridge restaurants, 18 rest and service areas and other ancillary services. To note, annual traffic volume on the expressways is about 11,131 mn passenger car unit km, with an average of 850,548 vehicles using the expressways daily. About 88% of the traffic volume consists of passenger cars while the remaining 12% is consists of commercial and other vehicles.

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DAP has proposed the government launch a takeover of PLUS Expressways Bhd and acquire the shares from minority shareholders at RM3.30 per share.

Tony Pua (PJ Selatan - DAP) said on Feb 25 the takeover of PLUS could be financed by the issuance of bonds at 3% interest. The RM3.30 offer, which would be 14.6% above Feb 24’s closing price of RM2.88, would cost the government RM5.25 billion. He said the 15% premium in the share price for the takeover would also ensure minority shareholders were protected.

He estimated the takeover could result in RM14 billion in savings for Malaysians from 2009-2015. This would be the amount saved either by Malaysians using the highway because of no further toll rate increases or in terms of compensation which would have to be paid by the government to PLUS Expressways.

The DAP Ops RESTORE (Restructure Toll Rates & Equity) Team said in statement the takeover could be financed by the issuance of Malaysian Government Securities (MGS) at 3% interest (or less), costing RM413 million per annum. The total repayment will amount to RM16.2 billion over six years.

The DAP said at the same time, PLUS should generate at least RM20 billion in net positive cash flow in the six years to 2015 without further toll rate hikes and a conservative 3% per annum traffic growth.

“Therefore by 2015, the government can completely repay the MGS and still have RM3.8 billion excess which could be used to build a better public transportation system throughout the country,” it said.

PLUS' market capitalisation is RM14.4 billion, based on the share price of RM2.88 per share on Feb 24. The government, via Khazanah Nasional Bhd, owns 65% of PLUS.

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MCA will urge the government to privatise toll concessionaire PLUS Expressways Bhd as the move will prove beneficial for the people, a spokesman said. At a briefing yesterday, MCA central committee member Wong Nai Chee said it could be done through the government investment arm Khazanah Nasional Bhd, which holds 63.88% of PLUS (inclusive of shares held under UEM Group Bhd).

Assuming a share price of RM3.50 to RM4 per share offered for the acquisition of the remaining shares not owned by the government, the total acquisition price is between RM4.55 billion and RM5.2 billion. He said the MCA would bring up its proposal at the upcoming monthly Barisan Nasional management meeting. MCA would also look at raising a dialogue with the Ministry of Works on the matter.

Wong said the government had an effective interest of 74% in PLUS through Khazanah and the Employees Provident Fund (EPF) Board (which holds 9.59% stake in PLUS as at April 30, 2008), leaving another 26% in the market. The move would also ensure that the company would become more sociably responsible, and not just have profitability in mind, said Wong. Wong added that making PLUS 100% government-owned would not prove a burden as the company was profitable. PLUS has been generating a profit of RM400 million to RM600 million yearly from the financial years 2004 to 2007, even if the gross compensation from the government for not increasing the toll is excluded. In terms of profit after tax margin inclusive of government compensation, the PLUS business yields a profit margin of above 50% from 2004 to 2008, Wong said.

The cash flow generated from operations excluding any receipt from government compensation for not increasing the toll is RM1.1 billion to RM1.4 billion yearly from 2004 to 2007. This clearly shows that if PLUS is taken over, the possibility of waiving toll increase can be carried out both financially or legally. It would also overcome the problem of minority rights in the future, said Wong.

Wong also said that since the declassification of the highway agreements in January, lawyers from MCA Youth legal affairs and parliamentary research bureau had gone through all 22 highway agreements and said that there were four issues that needed further deliberation and explanation at the cabinet level. This includes propriety of direct negotiations, rationale of granting loans to private concession companies by the federal government compensation payable by the government and verification of traffic volume numbers.
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February 27, 2009 - PLUS Expressways Bhd continued to see a year-on-year (y-o-y) earnings decline as net profit fell 25% to RM295.98 million in its fourth quarter ended Dec 31, 2008 (4Q08) from RM392.69 million a year earlier due to higher finance costs and higher provision for taxation. There was also recognition of negative goodwill of RM70.2 million in 4Q07 arising from the acquisition of Linkedua (Malaysia) Bhd. Its earnings have declined since the second quarter of last year, even as revenue and toll collections rise steadily. Revenue rose 25% to RM793.18 million in 4Q08 from RM634.47 million a year earlier.

It proposed a single-tier dividend of 9.5 sen per share amounting to RM475 million. With the payment of interim single-tier dividend of 6.5 sen per share on Sept 23, 2008, the total dividends for FY08 will be 16 sen per share or RM825 million, representing a growth of 14.3% against FY07. PLUS said the payout represented 74% of the group net profit and for the third consecutive year, the group honoured its KPI commitment on a minimum dividend growth of 12% for financial year 2008.

For FY08, net profit fell 13.6% to RM1.08 billion from RM1.25 billion in FY07 mainly due to higher provision of taxation, while revenue rose 30% to RM2.97 billion from RM2.28 billion. Basic earnings per share fell to 21.59 sen from 24.96 sen. Revenue growth was due to higher toll collection and higher net toll compensation of RM275.4 million in the absence of deduction of notional tax on tax exempt dividend for the year 2008 following the election of single-tier tax system during the year.

PLUS said toll collection rose nearly 10% or RM53.2 million to RM596.2 million in 4Q08 from RM543 million in 3Q08, mainly due to higher traffic volume growth, during festive periods and year-end school holidays. Compared to 4Q07, toll collection was 18.6% or RM93.5 million higher, mainly due to contribution from new subsidiaries Expressway Lingkaran Tengah Sdn Bhd (Elite), Linkedua and Konsortium Lebuhraya Butterworth-Kulim (KLBK) Sdn Bhd as well as growth in PLUS toll collection of 2%.

For FY08, toll collection rose by 23% or RM416.5 million to RM2.24 billion from RM1.82 billion in FY07, mainly due to a year-on-year traffic growth of 5.2% for PLUS, giving a higher toll collection of RM92.3 million, as well as contribution from Elite, Linkedua and KLBK of RM324.2 million. For FY08, the group generated cash from operating activities of RM1.81 billion, 26.9% higher than 2007, with cash balance of RM2.23 billion as at Dec 31, 2008 after dividend payments of RM725 million.

On its headline key performance indicators (KPI), PLUS said the group had achieved the KPI set for the increase in lane-km by recording a growth of 25.7%, surpassing the target of 20%. For revenue growth, PLUS said it was higher than the 25% y-o-y growth target. It now targets a 5% revenue growth for FY09 and FY10, and a minimum dividend payout of 16 sen per share for FY09.

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SIME	33,052,046,500.00
MISC	30,874,564,100.00
PBBank	28,255,400,000.00
Tenaga	26,441,348,499.50
IOICorp	22,881,274,831.32
Maybank	22,160,398,300.00
Commerz	21,647,370,798.90
Petgas	19,391,572,767.00
Digi	16,405,250,000.00
Genting	12,148,548,525.60

PLUS Expressways' market cap is around RM15.2bn ($4.2bn), which would put it close to DIGI. Mind you, following the rights issue, Maybank's market cap has dropped to RM19.5bn. PLUS Expressway is bigger than Resorts World and BAT, just to put into perspective.

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My opinion:

You should consider not privatising because:

a) There are already too few big caps on the Bursa that attracts foreign funds and institutional investors. Already we have lost Maxis, can you imagine a time if IOI Corp and Sime Darby were to be taken private as well. You can then relegate the relevance of Bursa to foreign funds to almost non-existent.

b) The implications of taking PLUS private may mean that future capital raising for similar projects will be harder. Investors will consider that they will be taking the bulk of the risk upfront, but when traffic goes past critical mass, governments may take them private. It will translate into higher funding cost for similar projects in the future.

c) The majority of investors does not know that PLUS is actually Asia's largest listed toll expressway operator! The biggest. Next is Jiangsu Expressway (177 HK) and Zhejiang Expressway (576 HK). That certainly has to count for something, doesn't it? There are not many things that can put Malaysia on the investment map. We can argue about the merits of Sime Darby in acquiring the other big plantation firms, but at least strategically we have the largest plantation firm in the world. Being right up there in size means being able to dictate trends and squeeze out efficiencies. I think even management of PLUS does not realise the magnitude and relevance of the company and where its at, and what it can be.

d) The users-pay model for toll roads is an important aspect to expand the infrastructure and logistics for a country. Maybe some will argue that the terms may have been a bit too generous. That is up for debate. We should really embrace global best practices by opening up future toll projects for open tender. That way, we can ensure a fairer system on the consumers.

e) Toll roads operators will always get whacked when they start to rake in good profits, and the almost annual increments grate on consumers' nerves. I will give you an example, the Sydney Harbour bridge is less than 2km to cross and I remember as a student paying 50 cents to cross the bridge, now its $3.00. Toll roads are roads that may never be built (or being built quickly) if it wasn't done as a toll road. Toll roads must never be the only way to reach a destination, there has to be a choice. But generally, users in Singapore or Australia or the US do not gripe that much because their salaries and disposable incomes almost have a more than commensurate rise with other cost of living items and incidentals - and that is the crux of the matter.

f) If the government were to take up all the funding for all toll roads and make it free for all users, governments everywhere will never get to where they are now. Taxes will have to rise substantially to fund, repair and maintain them.

g) Looking at the positive side, at least Malaysia has not sold any tollways to foreign infrastructure operators like Macquarie Infrastructure. That company has bought over power plants, tollways, airports, etc... and there has not been a single positive feedback from consumers. Costs and annual hikes have been even more prohibitive when its sold and managed by independent companies.

h) The main gripe has more to do with rising cost of living that does not match the earnings power and growth of normal Malaysians. I have argued before that local salaries are depressed by virtue of the rise in foreign workers and Malaysia's addiction to subsidise for almost every thing. We subsidise fuel/gas, have controlled prices on many goods, we subsidise too many things, which prevents our salaries from rising and our grand plan is not strong enough to continually move our industries further up the value chain. Then you have these tollways which gets their guaranteed increments year in year out.

Consider how much it cost to travel on the NSE in 1995, when graduates pay was around RM2,000-2,200 ... and you compare today the cost of traveling on the NSE. 14 years later and graduates starting pay is still around RM2,200-2,500. That is the crux of the problem.

The government and politicians are fighting the wrong battle by taking PLUS private to appease the general public. The correct battle is to reduce foreign workers, reduce subsidies for fuel/gas and electricity for companies, and trash out the inefficient and ineffective industries we have been shouldering (such as auto). The quite inefficient allocation of resources by having huge taxes and duties on car imports just to protect the failing local auto makers should be scrapped. Malaysia is still in the top 3 places on earth where it is costliest to buy a car - that robs the people of a lot of purchasing power. Think better strategically, and you will find the public not so opposed to the toll rates. If your Toyota only cost you RM50,000 and not RM98,000 - I think many of those who rant and vent their anger at tolls would be placated.

We are addressing the wrong issue, we are getting angry at the wrong issue. Its not toll rates but our purchasing power and inefficient allocation of resources. Until then, we will keep fighting the wrong battles and getting angry at the wrong things. Get the big picture right once and for all.

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Shareholders (percentage ownership)

Updated: January 12, 2009

UEM Group Berhad	40.21%
Khazanah Nasional Berhad	15.02%
Employees Provident Fund Board (EPF)	9.59%
Khazanah Nasional Berhad	8.65%
Amanah Raya Nominees (Tempatan) Sdn. Bhd. (Skim Amanah Saham Bumiputera)	3.99%
Kumpulan Wang Persaraan (Diperbadankan)	3.91%
Cartaban Nominees (Asing) Sdn. Bhd. (SBB Fund 4545 for Lazard Emerging Markets Portfolio)	1.05%

p/s photos: Angelababy Yang Wing