KUALA LUMPUR: The Employees Provident Fund (EPF) continues to capitalise on the arbitrage opportunity between the current market price of Lingkaran Trans Kota Holdings Bhd (Litrak) shares and the RM5.08 a share return on the winding-up plan the company’s board has proposed to undertake.
The retirement fund bought another 99,200 shares in the toll road operator on June 22 to take its share held to 33.1 million shares from about 30.56 million shares it had on April 5, 2022 after the company received the offer to purchase its highway stake from Amanat Lebuhraya Rakyat Bhd (ALR).
The shares traded between a range of RM4.80 and RM4.75 before closing at RM4.75 on June 22. Litrak shares closed up one sen to RM4.78 yesterday, which is at a 30-sen discount or 6.28% to the RM5.08 offer price.
An analyst said the gap in the share price was not usual, as it simply means that investors were just looking to exit the stock, rather than waiting for an EGM to be called to vote on the proposals.
“Some investors who are not willing to wait are choosing to exit now, while those who can wait are still holding on,” he told StarBiz. The EPF’s buy, however, provides support to any downside for the share price, he added
ALR has proposed to acquire all of Litrak’s stake in the Damansara-Puchong Expressway and Sistem Penyuraian Trafik KL Barat Sdn Bhd (Sprint) for RM4.48bil.
Litrak, in which Gamuda Bhd holds a 42.8% stake, announced earlier this month that it will distribute RM2.71bil of the proceeds in a special cash dividend and undertake a capital repayment to wind up the company.
The amount shareholders will receive is equivalent to RM5.08 per share. Litrak’s board said it does not intend to maintain its listing status.
“If the proposed distribution is not approved or carried out, the board of Litrak will consider other available options to return the disposal proceeds to the shareholders through a proposal to voluntarily wind up Litrak.
“If the proposed distribution is approved and carried out, the board of Litrak will apply to Bursa Malaysia for the voluntary withdrawal of Litrak from the Main Market of Bursa Malaysia after the completion of the proposed distribution,” the company stated in a filing earlier this month. Litrak has yet the set a date for the EGM.
Another trader with a local brokerage said the price action in Litrak shares was similar to what transpired in the privatisation of MMC Corp Bhd last year.
MIDF Research has maintained a “buy” recommendation for Litrak with an unchanged target price of RM5.08. “We maintain our forward earnings estimates, as we believe that the tollable traffic volume would fully return to pre-pandemic levels in 2023.”