Investment Highlights

• We maintain BUY on Perak Transit (PTrans) with a fair val (FV) of RM1.49/share pegged to FY25F PE of 16x – 2 SD abo its 3-year average of 11x. Our FV also reflects our unchang 3-star ESG rating .

• We maintain our FY24F-FY26F earnings pending a res briefing to be held tomorrow.

• PTrans reported FY23 core net profit (CNP) of RM63.9m (excluding a one-off gain from the sale of land in Chepor, Per amounting to RM1.2mil). This comes 6% below our forecast b was broadly in line with consensus, missing by 5%.

• The group declared an interim DPS of 0.75 sen, bringing FY to 3 sen. This translates to a payout of 34%, a narrow mi against its dividend policy of 35%. We maintain our FY24F D forecast of 3.7 sen as management reiterates its commitme to the policy moving forward.

• YoY, PTrans’ FY23 revenue was flattish at +1.3%, backed stable performance of the integrated public transportati terminal business (IPTT) due to stronger contribution fro third-party project facilitation fees outside of the state, name Terminal Sentral Kuantan in Pahang and Terminal Bas Shah Perdana in Kedah. Nevertheless, FY23 CNP rose higher by 6.5 due to lower tax expense as the effective tax rate (ETR) declin by 8.4%-points due to reversal of deferred tax.

• QoQ, the group reported a sequentially weaker 4QFY23 topli by 7%, driven by a broad-based decline, particularly IPTT whi saw lower revenue sharing from logistics tenants as Kamp Putra Sentral saw fewer total ticket-purchasing passeng footfalls. For reference, the terminal registered a footfall 16.5k for FY23, lower by 12% against the previous ye Similarly, 4QFY23 CNP declined by a narrower 2.9% QoQ d to the lower ETR of 8.2% (-12%-points) from the reversal deferred tax.

• Moving forward, we expect to see an improvement in PTran FY24F earnings growth, premised on a resilient sal performance from its bus terminals amidst a gradu improvement in footfalls and occupancy rates for ret shops/kiosks coupled with maiden earnings contribution fro the commencement of operations at Terminal Bidor Sentral 1HFY24.

• We believe there is further upside to Perak Transit desp trading at current valuation of 13.4x (vs. its 3-year peak of 16 as the group offers growth opportunities through t development of future terminals whilst its earnings rema resilient as a defensive public infrastructure with a busine model that can be replicated in other states.

Source: AmInvest Research - 23 Feb 2024