Prolintas Infra Business Trust (PLINTAS) is an Islamic business trust constituted under the laws of Malaysia under the Trust Deed and registered with the Securities Commission Malaysia (SC) on 11 Dec 2023. The Trust is managed by Prolintas Managers, the Trustee-Manager. The Trust Group, through its subsidiaries, is principally involved in the construction, toll collection, operation and maintenance of the Highways. i.e. i) Ampang – Kuala Lumpur Elevated Highway (AKLEH), ii) Guthrie Corridor Expressway (GCE), iii) Lebuhraya Kemuning – Shah Alam (LKSA) and iv) Sistem Lingkaran Lebuhraya Kajang (SILK), as well as the provision of ancillary facilities to complement the operation of the Highways.

• Competitive strengths. PLINTAS’s competitive strengths include: i) sustainable cash flow for unitholders, ii) securing exclusive rights to manage the Highways with high traffic, iii) qualified and experienced Board and senior management team, iv) operational excellence through ISO-compliant management systems, v) adoption of innovative technologies for enhanced highway operations, vi) commitment to environmental, social and governance (ESG) initiatives for corporate sustainability, and vii) strategic growth via the acquisition of income-generating highways.

• Catalysts. Key drivers may include: i) overcapacity of public roads, ii) limitation of public transport, iii) population growth as well as development of townships and corridors near the Highways, and iv) growing income as well as increased affordability of vehicle ownership and toll usage.

• Key risks. Key downside risks, among others, include: i) expiration or early termination of the Concession Agreements, ii) competition between alternative route or mode of transportation, iii) buildings along the Highways lack planning permission and Certificates of Completion and Compliance (CCCs), iv) non- control of toll rate and compensation arrangement, and v) potential transition to a multi-lane fast flow (MLFF) toll system.

• RM1.08 Fair Value. We estimate the fair value for PLINTAS at RM1.08/unit based on dividend discount model (DDM) approach, as the Trust Group intend to distribute a least 90% of its distributable amount annually. The Trustee Manager will distribute a total distribution of RM70.0m for FY24F, with distribution yield and distribution payout ratio estimated at 6.7% and 101.9%, respectively. Is principally involved in the construction, toll collection, operation and maintenance of highways, namely, AKLEH, GCE, LKSA and SILK

Source: PublicInvest Research - 12 Mar 2024