Review

• Perak Transit’s (Ptrans) 9M19 core profit of RM27.9mn accounted for 68.7% of our full-year forecast and 79.0% of consensus estimates. However, we consider the results to be within expectation and look forward to additional contribution from Terminal Kampar Putra and interest savings from the issuance of Sukuk Murabahah (MTN) program. Note that the group has drawn down RM300mn (out of RM500mn MTN program) for repayments of existing loans.

• 9M19 pre-tax profit was 34.2% higher YoY due to: 1) maiden contribution from Terminal Kampar Putra, where the group has started receiving income from bus terminal operations and advertising revenue; and 2) higher contribution from Terminal Amanjaya on the back of increased rentals for advertising and promotional spaces.

• QoQ, 3Q19 core profit was 10.8% higher driven by higher revenue from terminal operations and bus operations. However, net profit was 13.5% lower due to lower effective tax rate in the prior quarter.

• For this quarter, the company declared a second interim dividend of 0.75sen/share, bringing the YTD total dividend to 1sen/share. This was a tad higher than 0.95sen/share declared for 9M18.

Impact

• No change to our FY19-21 earnings projections.

Outlook

• Terminal Kampar Putra is expected to be fully opened in Mar-20 with a complete certificate of completion and compliance to be received by 1Q20. According to management, the company has already secured tenancies to take up more than 70% of net lettable areas. Currently, only ground floor is opened for bus operations.

• The delay in opening of Terminal Kampar Putra, which initially slated for opening in 1Q19, will not result in significant cost overrun. In fact, it has met the construction budget of RM128mn. There will only be some opportunity costs due to the delay.

Valuation

• We maintain Ptrans’ target price at RM0.44, based on unchanged 10% discount to the group’s SOP-valuation (see Figure 1). Maintain Buy.

Source: TA Research - 22 Nov 2019