Perak Transit Bhd is on its way for a robust bullish trend in the near term.

The counter, which closed at RM1.26 on Feb 16, looks likely to head towards RM1.30 in the near term.

If it crosses that level, the counter may even surpass its 52-week high of RM1.38 to touch RM1.45.

In the past year, Perak Transit has gained 17% already and just in a week, it has appreciated 8.6%.

The counter had made a steady recovery since hitting a low of 98 sen in May last year.

As an integrated public transportation terminal operator and bus services provider, Perak Transit may not be a ‘sexy’ counter.

But it is in a defensive sector which offers a good opportunity for investors to have a piece of the counter.

Analysts favour Perak Transit for its sustainable recurring income from rental of spaces within bus terminals.

Profit contribution from public bus services may be small, but It managed to effectively monetise the leasing spaces within bus terminals to generate larger profit.

There is also the sticky demand for advertisement and promotion (A&P) space, and earnings growth from operation of new bus terminals.

Interestingly, the company primarily generates its rental income through tie-ups with companies that seek effective platforms to reach out to end-users.

Notably, marketing agencies have been Perak Transit’s customers, taking up the A&P space and renewing the contracts since 2016 given the sustained passenger footfall into the bus terminals.

Also, Perak Transit has huge bargaining power given the high barrier to entry into bus terminal operation.

As such, the company is already showing resilient growth from steady improvement in occupancy rates and improving footfalls at Terminal Meru Raya and Kampar Putra Sentral.

Furthermore, investors can expect maiden earnings contribution from terminal Bidor Sentral, which is expected to kick in from 1HFY24 onwards.

Its earnings are forecasted to grow at 11% compound annual growth rate over FY22-26 to RM85 million driven by new income stream from Bidor Sentral beginning 2H24.

The Terminal Tronoh which is currently in planning stage would provide further upside its earnings.

For investors looking at companies in the sustainability space, Perak Transit has been gradually making headways with carbon reduction efforts

It is increasing the adoption of solar energy as well as transitioning its current fleet of diesel-fueled buses to electric models over the coming years.

Essentially, it is good to be in a near monopolistic business especially given its stronghold in the northern state and this would provide confidence to investors of the sustainability of its income growth.