3QFY21 CNP of RM13.7m brought 9MFY21 CNP to RM40.5m, which came within our expectation at 77% of our FY21 estimate. The logistics segment, which aims to utilize the vacant spaces in PTRANS’ terminals, has started contributing in 3QFY21. On the Terminal Management Services segment, we are no longer expecting any more contracts this year, and we continue to expect 3~4 contracts in FY22. All in, we raised our FY21/FY22 revenue by 3%/6%, and CNP accordingly. However, we lower our DCF-TP from RM1.15 to RM0.85 erring on the side of caution on A&P revenues, and thus raised WACC from 7% to 9%. We maintain our OUTPERFORM call premised on its attractive FY22E dividend yield of 4.7%.

9MFY21 within. 3QFY21 CNP of RM13.7m brought 9MFY21 CNP to RM40.5m, within our/street’s expectations at 77%/79% respectively. The declared fourth interim DPS of 0.825 sen brings FY21 DPS to 3.225 sen (9MFY21 DPS of 2.4 sen), marginally above our FY21E DPS of 3.2 sen.

YoY, 9MFY21 revenue rose 26% on inclusion of Kampar Putra Sentral contributions. Petrol Station revenue fell 6% and bus operations’ revenue fell 8% likely because most of 9MFY21 saw strict lockdowns vs. only six months in 9MFY20. With PTRANS’ higher-margin IPTT segment making up a larger 68% of total revenue (vs. 9MFY20 of 57%), EBITDA margin expanded 9.4ppt, bringing EBITDA up by 44%. On a 37% decline in interest expense, PBT swelled by 73% to RM54m. However, the higher tax expense weighed and core PATAMI rose less, by 42%.

QoQ, revenue inched up 1%, lifted by the logistics segment’s maiden contribution. Costs and margins remained relatively stable QoQ, and thus core PATAMI rose accordingly by 1%.

Outlook. Currently, PTRANS has two logistics tenants taking up 30~40% of Terminal Meru Raya and 10% of Kampar Putra Sentral. PTRANS will earn from the greater of percentage of revenue share or RM500k/month (for customer B) and RM150k/month (for the smaller customer U). While management is guiding a monthly contribution of RM2.5m to RM3m from the logistics business, we conservatively estimate RM1m monthly contribution for now. PTRANS hopes to bring on more logistics tenants to beef up the occupancy at Kampar Putra Sentral, which currently stands at 60% (vs. our full-year expectation of 70%). On Terminal Management Services (TMS), management is not expecting any more TMS contracts for the rest of this year, which we have just adjusted for in our FY21 estimates, but continues to expect 3 to 4 contracts next year, in line with our estimate. On A&P and retail space rentals, management is hopeful that they can raise rental rates next year. However, we are assuming that there will be no increase, i.e. rates will maintain at FY21 levels.

Post results, after netting the lower-than-expected occupancy rates at both terminals with the new logistics contribution, we raise FY21/FY22 revenue estimates by 3%/6%, and CNP accordingly. We maintain our FY22 DPS estimate of 3.3 sen.

Maintain OUTPERFORM with lower DCF-TP of RM0.85 (from RM1.15) as (i) we err on the side of caution on A&P revenue (~20% of total revenue), where two agencies pay PTRANS for advertising and promotional events space in their terminals, even amidst lockdowns and a low footfall environment, and (ii) on continued concerns around the declining project facilitations fees, which management has guided to decline over the long run. To clarify, management was not able to provide examples of “promotional events” in 3QFY21 citing lockdowns. We have accounted for said concerns by increasing our WACC from 7% to 9%. The new target price implies a 9.5x FY22E PER, at its 4-year historical average. Our OUTPERFORM call is premised on its attractive FY22 dividend yield of 4.7%.

Risks to our call include: (i) high dependency on two advertising and promotional (A&P) clients, (ii) faster-than-expected loss of income from project facilitation fees, (iii) lower-than-expected take-up rates and footfall in Kampar Putra Sentral, and (iv) unexpected termination of TMS contracts.

Source: Kenanga Research - 17 Nov 2021