Affin Hwang Research maintains Buy for Perak Transit

KUALA LUMPUR: Affin Hwang Capital Research is maintaining its Buy call on transport operator Perak Transit with a higher target price (TP) of 40 sen which is based on discounted cashflow (DCF), providing 33.1% upside. Its last traded price was 30 sen.

It said on Wednesday it changed its valuation methodology from a straight price-to-earnings (PE) to DCF, as it is a better way to capture the group’s mid to long term earnings prospects. 

“We continue to like Perak Transit for its (i) attractiveness as a monopoly business; (ii) strong earnings growth from its existing core businesses; and (iii) long-term potential from the upcoming terminal in Kampar. Key risk includes a slowdown in construction of Kampar terminal,” it said. 

Affin Hwang Capital Research recently visited Perak Transit’s construction site at Terminal Kampar, which is five minutes away from Universiti Tunku Abdul Rahman (UTAR) and Tenby International school. 

It said the construction of Terminal Kampar is on track and it expects the terminal to start operations by 4Q18. 

It also said Perak Transit intends to build an integrated lifestyle hub, which will have its own hotel and provide other facilities like badminton courts, gym, cinema, library and bowling alley, within the new 480,000 sf Kampar bus terminal. 

“We visited the vicinity of Kampar, which has limited places for recreational purpose, for at least the c. 30,000 student population. 

“We think the new integrated lifestyle hub will likely attract UTAR students and in turn attract more F&B and retail businesses,” it said. 

Affin Hwang Research said with about 400,000 sf of commercial space available, rental income and adex revenue will be additional income drivers for the bus terminal. 

Promotional events and advertisements have contributed significantly to the group’s revenue, but even more pronounced to its profitability. 

“We are expecting Perak Transit’s revenue and core net profit in 2019E to grow by 24.2% and 51.0% on-year, when the new terminal is fully operational,” it said.  
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3

Next In Business News

Bermaz profit raises to RM133.9mil in FY21
Palm oil reverses course to trade up 1% on stronger US soyoil
Uzma, Petra Energy JV wins onshore petroleum E&P contract in Sarawak
Ipmuda sells PJ property to Kerjaya Prospek, eyes expansion into renewable energy and healthcare businesses
Tenaga, plantations power KLCI sharply higher
Malaysia maintains CPO export tax at 8% for July
FDI slips to lowest since 2009 due to pandemic
Vehicle sales in May doubled on-year but minimal sales seen in June
Malaysia's Carsome weighs US listing with SPAC as option
Pound tumbles as virus resurgence clouds hope for UK recovery

Stories You'll Enjoy