Potential upside for Prolintas Infra BT share price

PETALING JAYA: Prolintas Infra Business Trust (BT) has been ascribed a fair value of RM1.06, representing a potential upside of 11.6% from its initial public offering (IPO) price, says TA Research.

The brokerage revealed its fair value is based on a target yield of 6% to a projected dividend per unit (DPU) of 6.38 sen for 2025.

Prolintas Infra BT, the first business trust in Malaysia, is scheduled to be listed on March 25 with a market capitalisation of RM1.05bil based on an IPO price of 95 sen.

TA Research noted that the IPO price was based on an estimated dividend yield of 6.7% for 2024.

In its report yesterday, the brokerage said its target dividend yield of 6% for Prolintas Infra BT for 2025 was reasonable, given the trust group’s consistent revenue streams from long-term concessions, coupled with high barriers to entry and limited competition. TA Research said Prolintas Infra BT presented promising growth opportunities and held a syariah-compliant status.

“Drawing on the traffic consultant’s report, which forecasts a 3.3% and 3.5% growth in traffic volume for 2025 and 2026 respectively, we project Prolintas Infra BT’s distributable income to increase by 2.1% and 3.7% in the corresponding years,” it said.

“For 2025 and 2026, we project Prolintas Infra BT to pay out 6.38 sen per unit and 6.61 sen per unit respectively, based on our payout ratio assumptions of 100%.

“Based on the IPO price of 95 sen, this translates to DPU yield of 6.7% to 7%,” it added.

It noted that comparatively, listed syariah real estate investment trusts currently offer 2025 distribution yields ranging from 4.6% to 6.2%.

“Prolintas Infra BT comprises highway infrastructure assets that generate significant cashflows primarily through toll revenue.

“Despite maintaining a cash balance of RM312.9mil as at Dec 31, 2022, the trust group’s profits are impacted by non-cash expenses such as the amortisation of highway development expenditure, leading to a net loss of RM11.3mil,” TA Research said.

“The business trust structure enables the trustee-manager to distribute income to unitholders based on the cash flow generated by the business without being constrained by accounting profits,” it added.

Prolintas Infra BT has provided its net profit forecast for 2024, with net profit and distributable income amounted to RM8.3mil and RM68.7mil respectively.

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