PETALING JAYA: Perak Transit Bhd is on track to complete the construction of Terminal Kampar by the the fourth quarter of this year, which is currently 60% completed.
According to a report by PublicInvest Research, the construction is already at the third or fourth floor of the 10-storey integrated bus terminal in Kampar.
“The concept of the terminal will be on the food and beverage (F&B) services.
“Perak Transit is in the midst of finalising the anchor tenants for the supermarket as well as operators for the hotel, cinema, and bowling centre,” said PublicInvest Research.
Apart from that, Perak Transit has increased its rental of advertising and promotional (A&P) spaces in its current Terminal AmanJaya by an estimated 15%, beginning early of this year.
This is due to the adoption of new digital boards, which enables more advertising space. Perak Transit currently rents its A&P spaces to third party companies for a fixed annual payment, where the third party companies will source for advertisers and promoters. According to a source, the increase in rental of A&P spaces provides an organic growth avenue for Perak Transit, which should translate to a double digit net profit growth on an annual basis.
Meanwhile, PublicInvest Research commented that Perak Transit’s plan to migrate onto the Main Market of Bursa Malaysia is positive as the group will be able to open itself to a wider pool of institutional investors, which currently makes up only 7%.
The migration to the Main Market is expected to completed by July or August this year.
On the termination of a new share placement with Macquarie, the research house believes that the termination is positive as it removes the dilution effect on earnings per share.
“Also, given the weakness in share price, the expected proceeds to be raised would have been lower.
“Hence, we think it is beneficial for Perak Transit to terminate the deal and opt for alternative funding like bank borrowings.
“We like Perak Transit, as it is the only bus terminal operator in Ipoh and likely to be as such in other satellite towns within the state.
“Strong earnings growth is expected from operations of the new Terminal Kampar, which is estimated to be eight times larger than Terminal AmanJaya’s gross leasable area,” said PublicInvest Research.
The research houe added that the company’s management has hinted that its dividend payout will be maintained around 30% this year, higher than its dividend policy of 25% annually.