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Author: PublicInvest   |   Latest post: Tue, 22 Jun 2021, 9:57 AM

 

Perak Transit Berhad - Expect Earnings Improvement in FY21

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Perak Transit (PTB) reported a net profit of RM13.2m for 4QFY20 (+11% YoY), bringing its FY20 to RM41.8m. This was in-line with our and consensus full year forecasts at 105% respectively. Separately, PTB also announce that its wholly-owned subsidiary of Terminal Urus Sdn Bhd has entered into another collaboration agreement to manage a bus terminal known as Terminal Bas Shahab Perdana in Alor Setar, Kedah. The collaboration will be for a total period of 15 years, commencing from April 2022, or upon the completion of the renovation works. We estimate PTB to receive at least RM1.5m per year (~3% of PTB’s FY21F) from the rental of shops and kiosks in TBSP (excluding rental of A&P spaces), based on the same gross leasable area of Terminal Aman Jaya in Perak. We adjust our earnings forecast higher by an average of 16% (for FY21-22F) to account for higher project facilitation fees and income from new terminal management services. As a result, our DCF-based target price is also revised to RM1.16 (previously RM1.10). We retain our Outperform call on PTB.

  • 4QFY20 revenue (QoQ: +1%, YoY: +7%). PTB reported higher YoY revenue of RM35m in 4QFY20 mainly due to rental from leasing of Advertising & Promotional (A&P) spaces at Kampar Putra Sentral, which commenced from September 2020 and higher recognition of project facilitation fees (+70% YoY). For full year FY20, revenue dropped by 4% YoY to RM119m, mainly from lower income from bus operations (-24%) and petrol stations services (-35%). This was on the back of voluntarily halted of stage bus operations for about one and a half months in the current year in a bid to contain the spread of COVID-19 as well as lower sales volume and fuel price respectively. Nevertheless, this was partially offset by higher income from integrated terminal operations (+27%) mainly from higher project facilitation fees (+35%).
  • 4QFY19 net profit (QoQ: +10%, YoY: +11%). Pre-tax profit for 4QFY20 jump 91% YoY to RM17.6m mainly due to higher project facilitation fee as well as stronger A&P income. Net profit for 4Q however only increased by 11% YoY to RM13.2m due higher income tax expenses. For full year FY20, its net profit grew by 5% YoY to RM41.8m despite weaker revenue as its operations were affected by the COVID-19 outbreak.
  • Dividend. A first single interim dividend of 0.8sen per share (after the share consolidation) was declared for FY21, with payment date on 21 May 2021. Furthermore, PTB has revised its dividend policy to distribute dividends at least 35% out of the net profit attributable to the shareholders.
  • Another terminal management services collaboration. Terminal Urus Sdn Bhd had entered into a Collaboration Agreement with NSS IT Solution Sdn Bhd to manage Terminal Bas Shahab Perdana in Alor Setar, Kedah (TBSP). This is for a period of 15 years, from 1 April 2022 or upon the completion of the renovation works in TBSP. Terminal Urus will pay a portion of TBSP’s investment cost amounting to RM6.5m, to be funded via its internally generated income of the Group.
     
  • Compared to a fixed monthly management fee as in the previous collaboration agreement with Terminal Sentral Kuantan in January 2021, PTB will involve in commercialising the leasable space of TBSP, where it will entitled to receive all the rental of shops and kiosks, rental of A&P spaces, car park fee, taxi fee, lavatory fee and other income pertaining to the commercial area of the terminal. We estimate PTB to receive at least RM1.5m per year (~3% of PTB’s FY21F) from the rental of shops and kiosks in TBSP (excluding rental of A&P spaces), based on the same gross leasable area of Terminal AmanJaya in Perak.
     
  • Outlook. We expect earnings improvement from FY21 onwards upon full commencement of the new Terminal Kampar. In addition, we understand that management is currently targeting at least to secure four to five terminal management services in the immediate term. We are positive on this development as this will incur minimal capital expenditure and faster expansion of bus terminal operations into other cities. This has yet to be included into our valuation.

Source: PublicInvest Research - 24 Feb 2021

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