Tak percaya check sendiri

Assuming Capital structure of RM33 billion, for simplicity purposes, FCFF = operating cash flows - capex but BEFORE bond payments and dividends.

Before: 2019: RM2.5 bil FCFF, 2038 RM5.6 bil FCFF
After: 2019: RM1.9 bil FCFF (18% reduction), 2058: RM4.5 bil FCFF (18% reduction)

both have IRR of 9.4%. ie: the toll IRR hasnt changed before and after the reduction.

possible upside due to increased volume, however, government actually still owes PLUS when FHR2 and Bukit Kayu Hitam toll terminated, in the RM200 millions. so its possible that it will be used to pay for this too.

The thing is after so many years the highway is already paid off! Why still need to collect tolls

IRR is dependent on cash flow timing. it is all-in (includes capex, opex, excludes borrowing cost, dividends)
you can do it yourself on excel. just straight line it. the number wont run much.

20 years extension bro.
more years of cash flow = higher IRR but its offset by the 18% reduction in toll

who wants to make money, terms can always renegotiate when you are losing money, ask for compensation

just siphon it off via maintenance

Third owner can't wait to get in!!!

Back when PLUS highway and other highway was build based on IRR 20%!  

When you sell a highway, you need to revalue your debt, equity and recalculate your capital structure.

The last transaction was last decade. so the capital structure is more reflective of now. It was transacted at high-single-digit-IRR which is standard for IRR now.

IRR during that time was 20%, because risk was soo high and loans was expensive. corporates were borrowing at 10%-15% cuz its soo risky.

some =/= all.

if you are the equity, basically if your RM6 bil highway fails, u lose all your money. if traffic below projections, you lose all your money. if  no one likes ur highway you lose all your money. your contractor suk and lari? you lose all your money. highway is suky business now. all for an IRR of 9%? jual burger IRR 400% bro

hindsight is 20/20, we in 2020 knows PLUS is a good investment. but the guy who had to build it, knows nothing about future demand for a future road which no one knows about.

this is not EQUITY GUARANTEE.

you can say its conservative because you are behind 20/20

at the point the decision needs to be made to construct the highway, SOMEONE needs to put half a billion or so equity and risk total capital loss. If his internal IRR is 15%, in 1980, this is worth RM134 billion today at his internal IRR. This is NOT an easy decision. sure. traffic can be higher than expected and get IRR 20%. but the highway can fail and i get nothing due to the insane gearing.

This is what im saying about risk and IRR's.

its only an easy decision in hindsight.

personally, i dont think they are making too much money. they took the risk, they did the project well, they designed the highway well, and they made money

stop thinking making money is songlap. the government could not and would not afford that highway. thats why they tap the capital market. And the capital market demands this returns for risk.