Malaysia’s toll concessionaire, Litrak’s share price has dropped to significant low level of MYR3.72 on 26 October 2018, which may be attributable to on-going political-related discussions involving toll roads in Malaysia. As per chart below, we may see some price support at around MYR3.60-MYR3.65.

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What is the indicative fair value? Is it really undervalued at this juncture?

The thing about infra companies is that they are quite predictable in terms of future cashflows. Hence, people usually use DCF approach to value infra companies. My simple DCF (DISCLAIMER: with very high-level estimates & assumptions) came out with an indicative fair value of MYR3.62 @ cost of equity of 7.82%, which approximates current share price of MYR3.72 per share. In a nutshell, it is fairly valued at this juncture but may be relatively attractive for yield-seeking investors.

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