PETALING JAYA: The hike in toll rates, effective tomorrow, will likely result in lower traffic volumes, as motorists take on the full burden under the respective highway concession agreement (CA).
"While concessionaires will still be effectively receiving their CA rate post-hike, traffic volume is likely to suffer, as motorists will now be paying more with the subsidy removed," said Hong Leong Investment Bank (HLIB) Research in a note.
It added that every 10 per cent toll rate increase would result in a 1 per cent drop in traffic volume.
"However, given that the hike this time is more widespread, the price elasticity of motorists could be higher," it said.
The Government reportedly paid some RM559mil in compensation to toll concessionaires as a result of the actual toll rates being lower than the stipulated rates in their respective CA.
Toll rates along several major highways in the country will increase between 20 sen and RM4.70.
The highways are the Kajang Traffic Dispersal Ring Road, the Duta-Ulu Kelang Expressway, Maju Expressway, the Kuala Lumpur-Karak Highway, the KL-Kuala Selangor Expressway, the SMART Tunnel, the New Pantai Expressway (NPE), Besraya Highway, Lebuhraya Kajang Seremban (Lekas), the Guthrie Corridor Expressway, the Kemuning Shah Alam Expressway, the Ampang Kuala Lumpur Elevated Highway, Lebuhraya Damansara-Puchong (LDP), Sprint, Grand Saga Expressway, Senai-Desaru Expressway and the Butterworth Outer Ring Road.
A majority of these highways are in the greater Klang Valley area, except for two in Penang and Johor. Also, nine of the affected highways are owned by listed companies, most of which are owned by Gamuda Bhd and IJM Corp Bhd.
Gamuda holds a 45.5 per cent stake in Lingkaran Trans Kota Holdings Bhd, the concessionaire of the LDP and Sprint highways. It also holds a 50 per cent stake in the SMART Tunnel.
IJM wholly owns the NPE and Besraya, as well as a 50 per cent stake in the Lekas highway.
Analysts said the toll rate increase was in line with the scheduled incremental toll rates as per the CA of the various highways. "This move is also in line with the Government's subsidy cut initiative and does not come as a major surprise," said an analyst.
The toll rate increase is expected to have minimal earnings impact on most concessionaires. "This is because most concessionaires were already receiving their stipulated rates as per their CA via compensation from the Government," said HLIB Research.
The toll rate hike basically transfers the burden of the toll, which has been shared between motorists and the Government, solely to the motorists.
Therefore, although there will be minimal earnings impact for most concessionaires, their cash flows would improve, as they would not need to wait for the compensation payment.