Review

• Perak Transit’s (Ptrans) FY23 core profit of RM65.1mn was in line with expectations at 99% of our full-year forecast and 97% of consensus estimate. The company declared a first interim dividend of 0.75sen/share for FY24.

• FY23 core profit rose 7.9% YoY to RM65.1mn, underpinned by higher revenue and lower effective tax rate. The higher revenue, up 1.3% YoY, was driven by the integrated public transportation terminal segment, which helped to ease the rise in interest expense of 24.3% YoY. Meanwhile, the effective tax rate improved further to 19.8% for FY23 (vs 23.4% for 9M23) due to reversal of deferred tax on property, plant and equipment.

• QoQ, 4Q23 adjusted PBT contracted by 9.4% QoQ to RM18.9mn on the back of 7.0% drop in revenue. The decline was mainly due to lower profit sharing from logistic tenants in this quarter. In terms of financial leverage, 4Q23 net gearing climbed higher to 0.69x from 0.49x a year ago due to drawndown of additional borrowings to finance the construction of Bidor Sentral.

• Separately, Ptrans obtained shareholders’ approval for the proposed 1 bonus share for every 2 existing shares exercise, which will go ex-bonus on 6 March 2024. These bonus shares will also entitle for the first interim dividend of 0.75sen, which will go ex-dividend on 2 May 2024.

Impact

• No change to our FY24-25 earnings projections, pending management guidance at an analyst briefing today.

Outlook

• Previously, management guided that Bidor Sentral is expected to commence operations in mid-2024, targeting an occupancy rate of 70%. Meanwhile, the development of a new Tronoh Sentral would likely begin this year after the submission of development order to the authority. These two projects are expected to fuel Ptrans’ future earnings growth.

Valuation

• We maintain Ptrans’ SOP valuation at RM1.59/share (see Figure 1). Maintain Buy

Source: TA Research - 23 Feb 2024