Perak Transit (PTB) reported a flattish net profit of RM8.45m in 1QFY19. Excluding deferred tax income, its core net profit for 1Q19 jump by 54% YoY to RM8m due to higher rental income from construction equipment of RM1.9m. This came in within our and consensus expectations, making up 21% of full year forecast. We maintain our forecast, with an Outperform call on PTB at an unchanged target price of RM0.43 based on DCF-valuation. Currently, PTB is trading at 2 standard deviation below its 3-year historical average (Chart 1). We expect stronger earnings towards 4QFY19 on the back of maiden contribution from the new Terminal Kampar, whereby 1st phase of the terminal has commenced its operation. Meanwhile, the approval for the 2nd phase of the terminal i.e. the mall and hotel operation is expected to be received by 3Q19.

• Revenue (+9% YoY, -2.6% QoQ). PTB reported higher YoY revenue for 1Q19 to RM28.5m, compared to RM26.1m in 1Q18. This was due to the increase in rental of advertising and promotional spaces (A&P) in Terminal AmanJaya and higher project facilitation fee of RM5.95m (vs RM3.2m in 1Q18). As a result, revenue for its integrated terminal operation segment increased by 36% YoY to RM12.1m. However, this was partially offset by lower income from petrol stations operation segment (-9% YoY) owing to lower fuel prices compared to 1Q18. Meanwhile, income from its bus operation segment was flat YoY at RM7.7m. For QoQ, revenue declined 2.6% due to higher project facilitation fees recorded in 4Q18 at RM7m, compared to RM5.95m in current period.

• Core net profit (+54% YoY, -5.6% QoQ). PTB’s pre-tax profit jumped by 54% YoY to RM8.8m, owing to higher other operating income during the quarter, mainly due to the rental income from its construction equipment amounting to RM1.89m. A deferred tax income of RM0.5m was reported in 1Q19, compared to RM3.3m in 1Q18. Excluding this, its 1Q19 core net profit jump by 54% YoY to RM8m.

• Dividend. A first interim single-tier dividend of 0.25 sen was paid on 31 January 2019, translates to a payout ratio of 42% (vs 37% payout in 1Q18).

Source: PublicInvest Research - 24 May 2019