The Good (Strengths & Positive Highlights)

1. Strong Profit Growth

· Profit before tax jumped 51.5% year-on-year (RM17.7 million vs RM11.7 million).
· Net profit increased 276% (RM13.4 million vs RM3.6 million).
· Earnings Per Unit (EPU) rose to 1.22 sen (from 0.32 sen).

2. Revenue Growth Across All Highways

· Total toll collection increased by 2.5% to RM79.7 million.
· GCE led growth at +5.5% , followed by AKLEH (+4.3%), LKSA (+0.5%), and SILK (+0.7%).

3. Improved Operating Efficiency

· Operating profit rose 12% year-on-year (RM51.8 million vs RM46.2 million).
· EBITDA margin improved to 76% (from 69%).
· Lower highway maintenance costs (RM5.1 million vs RM7.5 million) and other operating expenses (RM8.7 million vs RM11.5 million).

4. Strong Cash Position

· Cash and cash equivalents increased to RM230.4 million (from RM224.6 million at end-2025).
· Net cash generated from operations rose to RM39.6 million (from RM36.5 million).

5. Positive Economic Backdrop

· Malaysia’s GDP grew 5.3% in Q1 2026, supporting traffic demand.
· Klang Valley urban highway market forecast to grow at 4.6% CAGR through 2027.

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The Bad (Risks & Concerns)

1. Net Asset Value (NAV) Declined

· NAV per unit fell to 52.53 sen (from 55.56 sen in Q1 2025).
· Total Unitholder’s Fund decreased from RM601.4 million to RM577.9 million.

2. Lower Other Income & Interest Earnings

· Other income dropped 23% (RM3.52 million vs RM4.57 million).
· Profit income from placements fell to RM3.35 million (from RM4.56 million), reflecting lower yields.

3. Higher Finance Costs

· Finance costs remain high at RM34.1 million, though slightly lower than RM34.5 million in Q1 2025.
· Total borrowings remain large at RM2.35 billion, with principal repayment only beginning in 2033.

4. No Distribution Declared

· No distribution per unit (DPU) was proposed for Q1 2026 (same as Q1 2025).
· Distribution yield is currently N/A, which may disappoint income-focused investors.

5. Taxation Expense Volatility

· Tax expense fell to RM4.3 million (from RM8.1 million), but the effective tax rate is still impacted by timing differences and deferred tax adjustments.
· The reconciliation shows significant non-deductible expenses (RM4.0 million) and deferred tax asset recognition.

6. Macroeconomic Risks

· Elevated fuel prices, inflation, and global geopolitical uncertainties could dampen traffic volume growth and increase operating costs.