TA Research maintained its earnings projections for PTB for this year through to 2027.
PETALING JAYA: The possibility of another margin call remains, given the continued substantial margin trading activity in Perak Transit Bhd
’s (PTB) shares on the market despite the decline in number of collateralised shares, analysts say.
Since the margin-call risk remains a concern, TA Research said it is adopting a more cautious valuation approach based on the PTB’s stress-tested valuation.
The research house has revised PTB’s target price to 46 sen a share from RM1.08 a share previously.
After a sell-off last month, TA Research said it sees this as a bottom-fishing opportunity on the expectation that PTB’s fundamentals will take charge once the margin-call risk subsides.
TA Research retained its “buy” call on the stock and maintained its earnings projections for PTB for this year through to 2027.
PTB reported a core profit of RM59mil for the first nine months of this year, which was in line with TA Research’s expectations.
The research house said PTB is currently trading at 4.3 times next year’s earnings per share or 0.4 times price to net tangible assets (NTA) with a net gearing ratio of 0.6 times.
This is undemanding for a company owning three gazetted purpose-built bus terminals in Ipoh, Kampar and Bidor.
Under stress tests, where TA Research eliminated all assets on the balance sheet except the three integrated bus terminals, petrol stations, work-in-progress for the Tronoh and Seri Iskandar terminals, fixed deposit and cash, PTB’s adjusted NTA for next year would drop to 47 sen a share from 70 sen a share.
On the heavy sell-off last month, PTB said it was not aware of any corporate development that caused the unusual market activity.
However, TA Research said it believes short-selling activity triggered margin calls on company founder Datuk Seri Cheong Kong Fitt and other shareholders, causing the shares to hit a limit down at 33 sen on Oct 22.
At the time of writing, Perak Transit was trading at 28 sen.
The selling intensified the next day as two brokerages sold 26 million shares belonging to Cheong.
TA Research said it believes the forced selling to Cheong and investors’ failures to top up margins after receiving margin calls.
