Perak Transit (PTB) reported a 14.2% YoY increase in 3QFY21 net profit to RM13.7m, mainly due to higher rental income from new logistic tenants. This brings net profit for 9MFY21 to RM40.5m (YoY: +41.4%). The results came in within our and consensus expectations, accounting for 76% and 79% of full year forecasts respectively. Despite the lockdown, the Group posted resilient performance underpinned by locked-in earnings from project facilitation fees, rental from leasing of A&P spaces and third-party terminal management services. Management’s proactive measure by transforming some commercial areas in its terminals into logistic hubs proves fruitful. The new logistic tenants have helped to lift earnings and are expected to improve occupancy rate and footfalls of both terminals. We expect earnings growth from retail kiosk outlets rental and A&P spaces to resume as footfall traffic recovers. We maintain our forecast at this juncture and retain our Trading Buy call on PTB with unchanged target price of RM1.16 based on DCF-valuation. PTB declared fourth interim dividend of 0.8 sen per share, bringing its YTD dividend to 3.2 sen.

• Revenue (YoY: +0.6%, QoQ: +0.8%). The Group reported marginally higher revenue of RM35.2m for 3QFY21 due to higher rental income from leasing of commercial area in Terminal Meru Raya and Kampar Putra Sentral to new logistic tenants which commenced in Sept 2021. The leasing is on percentage rent basis and is expected to contribute around RM2.5m-RM3.0m per month, subject to the growth of the logistic tenants. The higher rental income was partly offset by lower project facilitation fee (PFF) of RM11.8m (3Q20: RM14m), bus operations of RM5.5m (3Q20: RM6.5m) and petrol station operations of RM5.3m (2Q20: RM6.6m).

• Net profit (YoY: +14.2%, QoQ: +1.4%). 3QFY21 net profit increased to RM13.7m in tandem with higher revenue for terminal operations, which attributed to higher rental from leasing to new logistic tenants.

• Outlook. We expect the group’s earnings growth trajectory to resume as footfalls for terminals recover, as economic activities pick up following the achievement of high vaccination rate in the country. Currently more than 70% of Perak’s population are fully vaccinated. Near-term growth of the Group is expected to continue, driven by the Terminal Kampar and terminal management services. Meanwhile, the group’s 2 new bus terminals in Perak – Bidor Sentral (commence construction in FY21 and complete in FY23) and Tronoh (commence construction in FY23) should help sustain its long-term growth. To note, the Group has in August 2021 issued a RM100m Islamic Medium-Term Notes to finance the development of Bidor Sentral.

Source: PublicInvest Research - 17 Nov 2021