1QFY21 CNP of RM13.4m came within expectations, at 27% each of our/street’s FY21 estimates. Looking ahead, we expect PTRANS to be largely unaffected by delays in economic recovery and further lockdowns as its IPTT segment remains resilient with its recurring income. We raise FY21E/FY22E CNP by 7%/5% to account for stronger margins, lifted by the IPTT segment. We also raise DPS from 2.71 sen /2.88 sen to 3.2 sen /3.3 sen, yielding 4.8%/5.0%. Reiterate OUTPERFORM with unchanged DCF-driven TP of RM1.15, in line with 4-year mean PER of 14x.

1QFY21 within. 1QFY21 CNP of RM13.4m came within expectations, at 27% each of our/street’s FY21 estimates while revenue of RM35.5m is also within at 26% each. PTRANS declared a second interim dividend of 0.8 sen, bringing FY21 YTD DPS to 1.6 sen, which looks to be trending above our full year FY21E DPS of 2.71 sen (on sustained quarterly payout).

YoY, revenue rose 19% to RM35.5m, as a 55% increase in IPTT revenue offset the 16% and 19% declines in petrol station and bus operations, respectively. IPTT revenue rose as 1QFY21 accounted for revenue contribution from Kampar Putra Sentral, which commenced in Sept 2020. Revenue from petrol station operations fell due to lower sales volume, while bus revenue fell on lower bus fares. Both segments were adversely affected as a longer portion of 1QFY21 was affected by MCO 2.0 than 1QFY20 was by MCO 1.0. The IPTT segment lifted the Group’s margins (e.g. PBT margin from 31% to 51%), lifting PBT by 93%. However, the higher effective tax rate of 25% (vs. 7%) resulted in core PATAMI rising by a relatively modest 56%.

QoQ, revenue rose 1% as the IPTT segment remained unchanged, which is expected given the recurring nature of the revenue. Bus operations revenue marginally declined by 4%, but was cushioned by an 8% revenue increase in petrol station operations, driven by higher oil prices. With margins and tax rate remaining largely unchanged, core PATAMI rose in tandem by 2%.

Moving forward, we expect PTRANS to stay resilient against delays in economic recovery and further lockdowns. Management has indicated that there will not be any rental rebates for the A&P agents, while any rental rebates for the retail space is likely minimal and insignificant. We still expect PTRANS to secure another 2 to 3 terminal management services (TMS) contracts adding up to 4-5 TMS contracts for FY21, as management indicated that the new MCOs have not slowed down on-going discussions. The first TMS contract continues to contribute, while the second TMS contract is expected to start latest by April 2022, which we believe provides a comfortable amount of leeway for possible delays in renovation. To compensate for dampened footfall in its terminals and maximize the yield of its terminals’ leasable area, PTRANS will be leasing a portion (20~30%) of its terminals to logistics companies, of which PTRANS is currently having preliminary discussions with. In our view, any contribution will only be seen in FY22 and we do not foresee meaningful incremental revenue, as it is meant to compensate for dampened footfall.

Post results, we marginally raise FY21E/FY22E CNP by 7%/5% while leaving revenue unchanged, to account for stronger margins, buoyed by the IPTT segment. In light of the robust YTD DPS of 1.6 sen, we raise FY21E/FY22E DPS to 3.2 sen/3.3 sen (from 2.71 sen /2.88 sen), representing 38%/38% payout ratios, above management’s guidance of 35%. These yield 4.8% and 5.0%, respectively.

Reiterate OUTPERFORM and maintain DCF-driven TP of RM1.15 on unchanged WACC of 7% and TG of 2%. Based on FY22E CNP of RM55m, the current share price of RM0.665 implies a forward PER of 7.7x, significantly below its 4-year average of 14x. We view the recent share price correction as an opportune time to accumulate the stock.

Source: Kenanga Research - 27 May 2021