Perak Transit (PTB)’s announced that the Securities Commission has finally approved the listing transfer to the Main Market which, we believe, will enable a wider pool of institutional investors (i.e. currently at c.5%) to get into the stocks. Near term earnings boost will come from the new Terminal Kampar with commercial operation expected by 1Q2019, underpinning growth in the coming years. We conservatively estimate Terminal Kampar to be at least 50% occupied by FY19, contributing to the Group’s earnings growth of 25%. At current price, PTB is trading attractively at 9.5x FY19 EPS. We maintain our Outperform call on PTB with unchanged DCF-based target price of RM0.42.

• Terminal Kampar is 90% complete. Construction for the new terminal is currently at 90% completion, with commercial operation expected by 1Q2019. Terminal Kampar is a 5-storey bus terminal with a 12-storey hotel and has a gross leasable area of c.408,000 sqft (i.e. 8 times bigger than Terminal AmanJaya). Concept of the terminal will be centred on food and beverages (F&B) services, with a supermarket, hotel, cinema and bowling centre as its anchor tenants. We understand that PTB expects the rental rate to be between RM3 to RM5 per sf and has garnered more than 100 interested tenants for the new terminal.

• Share price performance. Volatile conditions as a result of heightened external uncertainties have drained confidence in the market somewhat, reflected in part by the FBM Small Cap Index which has plunged by 29% YTD. Share price of PTB has only fallen 3.7% YTD however, signalling investor confidence in the company’s outlook. We see this listing transfer, greater visibility and access to a wider pool of investors solidifying that prospect further.

Source: PublicInvest Research - 7 Dec 2018