-
IPO Note
20 September 2016
PP7004/02/2013(031762) Page 1 of 17
Perak Transit Berhad SUBSCRIBE Hop On The Bus, Let’s Go For A
Ride! IPO Price: RM0.15 Target Price: RM0.22 By Marie Vaz l
[email protected]
We like this new IPO, Perak Transit, for: (i) its q
uasi-recurring income model, (ii) being in a highly defensive sect
or with high barriers of entry, (iii) tax incentives and strong PAT
margins of 30.2-32.1% in FY17-18E, and (iv) future growth from new
Kampar terminal (IPO proceeds of RM36.8m is mainly for thi s
development). Forecast earnings of RM27.1-RM31.1m a nd 4.0-4.5%
yield in FY17-18E. Our DDM derived Target Pric e of RM0.22 (52.6%
total returns) implies FY17E PER of 9.4x. SU BSCRIBE.
IPO details. Perak Transit’s IPO (set to list on 6th Oct-16) on
the ACE market, with a market capitalisation of RM171.4m (based on
an IPO price of RM0.15/share), is raising RM36.8m in proceeds to
fund a new bus terminal in Kampar. At the helm of the management
team is Dato’ Sri Cheong Kong Fitt, who has over 20 years of
experience in public bus terminal operations. Post-listing, major
shareholders will have a sales moratorium of six months, lending
confidence to shareholders.
Dominating Ipoh’s bus travel due to high barriers o f entry.
Perak Transit’s main terminal, Terminal AmanJaya at Ipoh stands to
dominate due to the high barriers of entry as it is the only
gazetted bus terminal in Ipoh, implying that all express bus
services operating in Ipoh are mandated to pick up and drop off
passengers in Terminal AmanJaya. Perak Transit owns 97.8% of market
share in Ipoh’s stage bus passenger ridership.
Quasi-recurring income model provides defensive ear nings base.
Perak Transit’s main revenue driver consists of: (i) The Integrated
Public Transportation Terminal (IPTT) which makes up 78% of gross
profit due to its high margins of 87%, followed by (ii) Public Bus
Services (19% of gross profit), and (iii) Petrol Station Operations
(3% of gross profit). Out of the Group’s earnings, 50% of the
quasi-recurring income are from A&P, 5% from rental of shops,
and 19% for public bus services, which in total makes up 70-75%% of
the group’s gross profit. They also enjoy tax breaks resulting in
low effective tax rates of 9-7% in FY16-18E.
A&P a cash-flow and margin generator . The Group’s two
contracts for rental of its A&P space is the main driver for
its IPTT division (60-65% of IPTT revenue) which we believe will
drive growth for PAT margins going forward as it commands double
digit reversions YoY, and the Group can continue to expand
promotional spaces within the terminal without incurring major
cost.
Forecast earnings of RM27.1-RM31.1 for FY17-18E mainly from
A&P revenue growth, additional 25 buses in FY17, while the
project facilitation fee remains the icing on the cake. We are
expecting bottom line margins to expand in FY17, and estimating
30.2-32.1% PAT margins in FY17-18E from continued growth in the
A&P revenue YoY, and on the back of lower effective tax rates
(9%,7%,7% in FY16,FY17E,FY18E) derived from tax benefits received.
A dividend pay-out policy of up to 25% translates to FY17-18E DPS
of 0.59-0.68sen (4.0-4.5% yield based on the IPO price of
RM0.15).
DDM-driven Target Price of RM0.22 with total return of 52.6%
(7.69% discount rate; 3.19% 5-year risk free rate). Our TP implies
FY17E PER of 9.4x. There are no direct comparable but given its
quasi-recurring income base, we back tested our valuation method
against small cap (
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 2 of 17
BACKGROUND & BUSINESS
Perak Transit was incorporated in Malaysia on 5th September 2008
as a private limited company and was later converted to a public
company on 26th March 2010. The group is principally involved in:
(i) the operations and ownership of Terminal AmanJaya integrated
public transportation terminal, (ii) provision of public bus
services, and (iii) petrol sales business with the operations of
several petrol stations in Ipoh, Lahat and Kuala Kangsar, Perak. In
2015, its subsidiary, CKS Bumi signed a Retail Trading Agreement
with Petron Malaysia for the operations of a Petron petrol station
located at Lubok Merbau, Kuala Kangsar. The operations of the
petrol station commenced in August 2015.
Further in 2015, the group received a Letter of Intent from SPAD
on the appointment of The Combined Bus as bus network operator for
Ipoh under the SBST Programme for a period of eight years
commencing on 1st June 2016. The Combined Bus network is a
consolidation of public bus services in Perak such as General
Omnibus, Ipoh Omnibus, Kinta Omnibus and CKS Bumi which makes up
97.8% of bus services in Ipoh. Prior to the Consortium Arrangement
in 2009 and the LOI in 2015 by SPAD, public bus services in Ipoh
were operated by these public bus services operators, and Reliance
Omnibus, individually. Post the Consortium Arrangement, The
Combined Bus network will act as the manager for these consolidated
bus operations. The creation of the consortium was to improve the
standard of public bus services in Ipoh and surrounding areas to
achieve greater economies of scale through more centralised
management of bus operations, pooling of bus drives and operational
resources, whilst reducing duplication and competition of bus
routes.
Terminal AmanJaya has been in operations for almost four years
now with operations commencing on 25th Sept 2012. Terminal AmanJaya
is a three-storey building complex that has bus platforms (17
departure bays on the ground floor and five arrival bays on the
first floor) on which an entrance fee on express busses is imposed.
It also has 40 bus holding bays, ticketing counters, retail and
office space, promotional spaces, a budget hotel, lobby and
basement car park. The gross building area is 208,802sf with
49,291sf of gross leasable space. Construction cost for the
building was RM160m, which includes RM25m land cost. As of 2014,
Terminal AmanJaya was formally noted as the only gazetted express
bus terminal in Ipoh by SPAD, qualifying that all express bus
services operating in Ipoh are mandated to pick up and drop off
passengers at Terminal AmanJaya only.
Experienced management team. At the helm of the company is Dato’
Sri Cheong Kong Fitt who has over 20 years of experience in public
bus terminal operations. In 2006, Dato’ Sri Cheong Kong Fitt with
his business partners aimed to combine public bus services in Ipoh
Stesen Bas, Jalan Kidd with the aim to upgrade the standards of the
service and up to 2009 merged bus operations in Ipoh, General
Omnibus, Ipoh Omnibus and Kinta Omnibus, owing to his knowledge of
managing terminal and bus operations. Dato’ Sri Cheong Kong Fitt is
supported by key management personnel such as Dato’ Cheong Peak
Sooi, Executive Director, which will be in charge of the
construction of Terminal Kampar due to his long standing experience
in the construction sector (over 10 years).
Terminal AmanJaya and Bus Departure Bays during pea k hours
Source: Company, Kenanga Research
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 3 of 17
IPO Details
Share Capital
No. of Shares Share capital (RM)
Authorised share capital 5,000,000,000 500,000,000 Existing
issued and paid-up share capital 897,948,000 89,794,800 New Shares
to be issued pursuant to the Public Issue 245,000,000 24,500,000
Enlarged issued and paid -up share capital upon Listing
1,142,948,000 114,294,800 IPO Price per Share RM0.15
Proceeds from the IPO RM36,750,000
Market capitalisation (based on the IPO Price and enlarged
issued and paid-up share capital after Listing) RM171,442,200
Source: Company, Kenanga Research
Utilisation of Proceeds Purpose RM'm % Estimated timeframe
for
utilisation upon Listing
Business expansion 20.00 54.42 Within 24 months Repayment of
hire purchase facilities 2.11 5.74 Within 12 months Working capital
10.48 28.52 Within 24 months Estimated listing expenses 4.16 11.32
Within 6 months TOTAL 36.75 100.0
Note: There is no minimum subscription to be raised from the IPO
pursuant to the Public Issue. Source: Company, Kenanga Research
IPO Timeline
IPO Indicative Timeline Date Issuance of Prospectus/ Opening
Date for IPO Applications 15th Sept 2016 (10.00am) Closing Date for
IPO Applications 23rd Sept 2016 (5.00pm) Balloting of IPO
Applications 27th Sept 2016 Allotment of Public Issuance Shares to
successful Applicants 4th Oct 2016 Listing 6th Oct 2016
Source: Company, Kenanga Research
Post Perak Transits IPO listing, the allocated public portion
will be 21.44%, while main management, (i.e. Dato’ Sri Cheong Kong
Fitt, CBS Link, Dato’ Cheong Peak Sooi and Datin Sri Lim Sow Keng)
will collectively own 40.37%. Refer to table labelled ‘Shareholding
Effects’ below for the Group’s shareholding structure pre and post
IPO. The IPO proceeds of RM36.8m is mainly for Perak Transits
business expansion plan as RM20m will be allocated to partly
finance the development of Terminal Kampar by 2H18 (total cost
RM108m), while an additional RM10.5m will be to fund working
capital expenditure at Terminal Kampar for over one year for the:
(i) payment of salaries, (ii) payment of repair and maintenance,
(iii) purchase of diesel, and (iv) feasibility studies of potential
locations for building a new terminal. The balance of IPO proceeds
will be for repayment of hire purchase facilities and IPO listing
expenses.
Shareholding Effects
Source: Company, Kenanga Research
Pre-IPO Pos t-IPO
CBS Link, Dato' Sri Cheong
Kong Fitt & Datin Sri Lim Sow
Keng 49.32% 38.75%
Dato' Cheong Peak Sooi 2.07% 1.62%
Muamalat Venture Sdn Bhd 21.21% 16.67%
MTD Capital Bhd 11.14% 8.75%
Gemas Perunding Sdn Bhd 6.18% 4.85%
Senandung Asas Sdn Bhd 5.86% 4.60%
Maksima Amanjaya
Development Sdn Bhd 4.22% 3.32%
IPO Investors 21.44%
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 4 of 17
Long lock -in period by major shareholders lends confidence to
shareholders . The moratorium applies to the promoters’ entire
shareholding for a six-month period from the date of admission into
the ACE Market. Besides the promoters, Muamalat Venture, MTD
Capital, Gemas Perunding, Senandung Asas and Maksima Amanjaya
Development have voluntarily furnished an undertaking letter that
they would not sell, transfer, or assign their shareholdings for
the first six-month moratorium (refer to table below).
Additionally, there is no offer for sale of units on the part of
the promoters or major shareholders post the moratorium period
which we view positively as it signifies that major shareholders
will be committed in the long run.
Moratorium Details
Promoters/Shareholders Held under Moratorium for the first 6
months upon L isting
No. of Shares ('000) %(i)
CBS Link 190,000 16.62 Dato' Sri Cheong Kong Fitt 178,263 15.60
Datin Sri Lim Sow Keng 74,658 6.53 Dato' Cheong Peak Sooi 18,551
1.62 Muamalat Venture (ii) 190,476 16.67 MTD Capital 100,000 8.75
Gemas Perunding 55,481 4.85 Senandung Asas 52,593 4.60 Maksima
Amanjaya Development 37,926 3.32
Total 897,948 78.56 Notes:
(i) Based on our enlarged issued and paid-up share capital of
1,142,948,000 Shares after the IPO
(ii) Muamalat Venture is a corporation undertaking private
equity activity and registered with the SC pursuant to the SC
Guidelines on the Registration of Venture Capital and Private
Equity Corporations and Management Corporations. As such, the
moratorium imposed on Muamalat Venture on the sale, transfer or
assignment of our Shares will be for a period of 6 months from the
Listing.
Source: Company, Kenanga Research
INVESTMENT MERIT
Dominating Ipoh’s bus travel due to high barriers o f entry.
Perak Transits main terminal, Terminal AmanJaya at Ipoh stands to
dominate due to the high barriers of entry as it is the only
gazetted bus terminal in Ipoh. In FY14, Terminal AmanJaya was noted
by SPAD as the only gazetted bus terminal in Ipoh, implying that
all express bus services operating in Ipoh are mandated to pick up
and drop off passengers in Terminal AmanJaya. Perak Transit owns
97.8% of market share in Ipoh’s stage bus passenger ridership which
is expected to be at least maintained at this level going forward.
Given the performance of Terminal AmanJaya which has proven to the
state government that they have the capabilities to manage such
terminals, we believe Perak Transit will stand in good stead to
qualify for other terminals (i.e. Terminal Kampar) and enjoy ease
of approvals for bus permits.
Filling the demand gap for reliable transportation. Demand for
travel and good connectivity in Malaysia has been a long standing
necessity due to the lack of timely and reliable ground public
transport service. As such, over the years, the government and SPAD
have been ramping up initiatives to address the issue of enhancing
urban connectivity and rural and inter-city connectivity as part of
the National Land Public Transport Master Plan. As part of its
initiatives, SPAD developed myBAS in 2015, whereby the Federal
Government will invest RM100m in key cities including Kangar,
Seremban, Ipoh, and Kuala Terengganu to improve accessibility where
stage buses still remain the backbone of public transportation.
Perak Transit is continuously working closely with SPAD to enhance
connectivity in Ipoh through bus travel, and is the sole operator
of myBAS’s in Ipoh, owning 42 busses for myBAS operations. The
myBas model will allow Perak Transit to work on a cost per
vehicle-km model with SPAD, while SPAD will manage the cost of
operations, including drivers cost. This would allow Perak Transit
to be able to scale up quickly to meet consumer demand for busses
without worrying about the cost of operations, whilst generating
revenue for services rendered.
MyBas
Source: SPAD Website, Kenanga Research
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 5 of 17
Quasi recurring income model provides defensive earnings base .
Perak Transit’s main revenue driver consist of: (i) Integrated
Public Transportation Terminal (IPTT) Operations which makes up 78%
of gross profit due to its high margins of 87%, followed by (ii)
Bus Operations (19% of gross profit) and (iii) Petrol Station
Operations (3% of gross profit). Out of the Group’s earnings, 50%
of the quasi recurring income are from A&P, 5% from rental of
shops, and 19% for bus operations, which in total makes up 70-75%
of the group’s gross profit.
Revenue and Gross Profit Breakdown FY15
Source: Company, Kenanga Research
Gross Profit Margins by Segment
Source: Company, Kenanga Research
Advertising & Promotion (A&P), a strong cash flow gen
erator and margin driver. The main driver of its IPTT division is
from its advertising and promotion (A&P) business (60-65% of
IPTT revenue) while the remainder is made up of rental of shops and
kiosk (6-7% contribution), and project facilitation fee (24-27%
contribution). The Group’s A&P revenue is derived from rental
of A&P space to third party companies on an annual basis. Perak
Transit currently has two contracts for rental of its A&P space
with: (i) Century Edge Group which undertakes the rental of
promotional spaces at Terminal AmanJaya since 1st April 2015
including marketing solutions, event management, and real estate
services, and (ii) Angkasa Aman (outdoor and indoor advertising,
which includes the outdoor three-faced advertising billboard,
printing of banners, buntings, posters and rental management of
promotional spaces). Although there is a dependency on major
customers, we believe the likelihood of Terminal AmanJaya not being
able to secure A&P rentals in coming years is minimal as there
will continuing demand for A&P space as passenger traffic
remains strong being one of the few crowd drawing areas in the
area. Terminal AmanJaya also includes retail and F&B outlets as
that will continue to drive traffic to the terminal. Going forward,
we are confident on management’s abilities in renewing their
A&P contracts in coming years and we have assumed mid-to-high
teens reversions, in line with historical trends. Since the
terminal enjoys high people traffic, it would stand to reason that
the A&P-driven earnings are less susceptible to cyclical trends
or minimal downside risks. As a result, the Group has high PAT
margins which is only expected to improve going forward mainly from
the A&P segment’s high margins on double digit reversions YoY,
while Perak Transit may continue to expand such promotional spaces
within the terminal setting without incurring major cost apart from
the terminal sunk cost. As such, we are expecting bottom line
margins to expand in FY17, and are estimating 30.2-32.1% PAT
margins in FY17-18E from higher revenue from A&P, and on the
back of lower effective tax rates (9%,7%,7% in FY16,FY17E,FY18E)
derived from tax benefits received. Further details on tax
incentives are as below.
Integrated
Public
Transportation
Terminal
Operations
40%
Bus
Operations
29%
Petrol Station
operations,
and the
management
of ADO
incentive
programme
31%
Revenue Breakdown FY15
Integrated Public
Transportation
Terminal
Operations
78%
Bus Operations
19%
Petrol Station
operations, and the management
of ADO incentive
programme 3%
Gross Profit Breakdown FY15
79% 86% 87%
16% 18% 29%
8% 6% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY13 FY14 FY15
Gross Profit Margins
Petrol Station operations, and the management of
ADO incentive programme
Bus Operations
Integrated Public Transportation Terminal
Operations
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 6 of 17
Gross Profit margins vs. PAT margins
Source: Company, Kenanga Research
Control of market share for Public Bus Service. The bus
operations make up 19% of gross profit which is mainly derived from
provision of public stage bus and express bus services, as well as
rental of spaces on buses for advertisements. We expect
contributions from this segment to be stable going forward as Perak
Transit owns 97.8% of market share in Ipoh’s stage bus passenger
ridership operating 146 buses currently, of which 119 are public
stage buses and 27 are express buses. We expect the demand for
stage buses within Ipoh to be resilient as the state and SPAD will
continue to increase routes and buses in tandem with demand, with
Perak Transit being the main beneficiary due to the Group’s strong
track record with the state government. The routes are approved by
SPAD which contain fare stage with separate fare, timetable and
schedule of fares for each stage. Additionally the minimum number
of trips and frequency per day will be determined by SPAD. This is
part of the Consortium arrangement under The Combined Bus whereby
it pays for all the expenses for the operations and maintenance of
the buses, but is entitled to all the revenue and profits from the
business. As for express buses, Perak Transit operates five express
bus routes while the fares are set out by SPAD.
- Lastly, the Group’s petrol station operations consist of four
petrol stations based on a ‘dealer-owned dealer-operated model’
whereby Perak Transit erects a service station and convenience
store to supply motor fuels, lubricating oils and other petroleum
products at the station. However, this segment does not contribute
significantly to earnings due to is low margins, resulting in
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 7 of 17
Operating in a highly defensive sector ensures resi lient
demand. We expect demand for bus travel to continue to be resilient
as travelling is a necessity with inelastic demand. We believe bus
travel to and from Ipoh will remain a preferred mode of transport
in the future, due to its; (i) cost effectiveness as it is the
cheapest way to travel within Ipoh, and from Ipoh to other parts of
Malaysia (RM19-27 one way by bus vs. RM35-46 one way by train from
KL Sentral depending on seating class), especially for those
preferring not to drive, (ii) higher number of destinations
compared to travelling by train, as trains cover a limited number
of destinations compared to buses while buses departing from
Terminal AmanJaya, Ipoh serve over 60 destinations throughout
Peninsular Malaysia, Thailand and Singapore, and (iii) travelling
by plane may not be the viable option for most Malaysians due to
the higher pricing, and limited flights to Ipoh’s Sultan Azlan Shah
Airport, with flights mostly from Singapore and Johor.
Additionally, as Ipoh is strategically located between major cities
such as Kuala Lumpur and Penang, this makes bus travel a preferred
option for those commuting to and from these major cities coupled
with the fact that the duration of the journey is bearable, taking
between 3-4 hours of travel time from KL or Penang to Ipoh by bus,
respectively vs. 2.5 hours on average by train. We believe most
passengers commuting between Kuala Lumpur, Ipoh and Penang are
mostly for work and family or students that are studying in these
bigger cities, as such, the bulk of the traffic flow into Terminal
AmanJaya would be mostly during weekends, public and school
holidays (as most working professionals may opt to take leave) and
college/university semester breaks.
Chart of Express Bus Destinations from Terminal Aman Jaya
Source: Company, Kenanga Research
Train Destinations in Peninsular Malaysia
Source: Kenanga Research, SEA City Maps
A&P revenue will continue to grow in tandem with hi gher
passenger traffic at Terminal AmanJaya. As Terminal Amanjaya is the
only gazetted express bus terminal in Ipoh as noted by SPAD, all
express bus services operating in Ipoh are mandated to pick up and
drop off passengers at the terminal, ensuring the steady flow in
passenger traffic at Terminal AmanJaya. Terminal AmanJaya’s
passenger traffic numbers have been on the uptrend since management
started recording passenger traffic data in March 2013 (the
terminal commenced operations in September 2012). Passenger
traffic, which is calculated by the number of ticket purchasing
passengers, increased by 8.2% from full year FY14 to FY15. As for
FY16, a total of 250,883 passengers were recorded from Jan-16 to
April-16, while we believe a YoY increase is highly achievable
considering the period from January to April 2016 has not taken
into consideration higher passenger volumes during the Ramadan and
Hari Raya season in June 2016 to July 2016 and school holidays in
June 2016 as well as higher traffic during the school holiday
periods in December. We believe that that the terminal will be able
to sustain a passenger traffic growth of 5% YoY over the next few
years given the popularity of this mode of transport.
Do note that passenger traffic does not directly contribute to
revenue generated by Perak Transit terminal but is a good leading
indicator of the demand and popularity of Terminal AmanJaya, which
would allow for higher A&P fees going forward.
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 8 of 17
Passenger Traffic Breakdown at Terminal AmanJaya
Source: Company, Kenanga Research
Synergistic business model providing value-add serv ices whilst
managing cost. Besides focussing on generating revenue solely from
bus terminal operations, Perak Transit is leveraging on its strong
industry knowledge to provide Advisory Services via Project
Facilitation Fee’s from Maksima Timur Sdn Bhd. (13% of FY15
revenue). Maksima Timur is an operator of transportation business,
property development and investment holding, whilst its property
development activities include acting as a project manager for
construction of new integrated public transportation terminal
complexes, while Perak Transits services to Maksima Timur include
rental of Terminal AmanJaya’s equipment, utilities and facilities,
preparing preliminary concept paper for the proposed project,
discussion and sharing of knowledge on design, planning and
construction of terminal and attending all meetings organised by
Maksima Timur with SPAD and other relevant governmental
departments. We are confident of the flows from this segment given
their experience with Terminal AmanJaya and the management’s
long-term expertise in public bus services. Thus, we are
conservatively estimating that the project facilitation fees will
contribute 10-11% of FY16-17E top line. Such earnings streams are
‘icings’ as contributions has very little costs i.e. straight to
the bottom line. Additionally, the company is also managing cost
effectively as it owns; (i) four petrol stations, which helps
supply fuel to compliment the bus services, and (ii) an in-house
workshop to minimise repair and maintenance cost and reduce
downtime.
New earnings driver from the new bus terminal at Ka mpar by
2H18. The new Terminal Kampar is located approximately 32km away
from Terminal AmanJaya in Meru Raya. Terminal Kampar is expected to
ride on its own growing population within that locale from
increased upcoming economic activities. The Group acquired 3.72ac
of land in Kampar for RM1.3m in Jan 2016 and has obtained the
Development Order (DO) in May 2016, while the construction of the
terminal is currently pending approvals of the building plans which
is expected by 4Q16. Following that, the Group will start
construction of the new bus terminal in Kampar scheduled for
completion by mid FY18. The Terminal Kampar construction cost of
RM128.3m will be funded by part of the IPO proceeds of RM20m, while
we expect the remainder to be funded by internally generated funds
via bank borrowings of approximately RM108m (RM80m term loan,
RM18.3m internal funds, RM10m overdraft facilities). Guidance on
gross floor areas is pending final approvals. However, based on an
extrapolation of Terminal AmanJaya which has a plot ratio of 0.58x,
Terminal Kampar could have a GFA of 93,259sf, which we reckon could
be on a very conservative side. If we apply our average FY16-17E
A&P revenue psf of RM107/psf for Terminal AmanJaya and applying
a 10% discount rate, with contributions estimated to commence by
Aug 2018, this will add another RM3.7-8.4m to FY18-19E gross profit
or 8-15% or FY18-19E gross profit. Meanwhile, other bus terminals
that could be in the pipeline for Perak Transit include, Temerloh
Sentral, Pahang, Terminal Kemaman, Terengganu and Terminal Kota
Bharu, Kelantan. Additionally the Group is eyeing the management
and operations of another existing bus terminal in Pahang. Although
discussions are still at its infancy, this would bode well for
Perak Transit as it could add additional revenue streams on a
management fee basis, which we have not imputed in our earnings
model.
Map of Terminal AmanJaya, Meru Raya to Kampar
Source: Google Maps, Kenanga Research
760740
822775
720000
730000
740000
750000
760000
770000
780000
790000
800000
810000
820000
830000
FY14 FY15
Number of Passengers (persons)
8.2%
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 9 of 17
Details of the Business Expansion plan a.k.a Termina l Kampar
Descr iption Amount (RM'm) A. Construction cost (1) Site clearance,
site improvement, earth works, piling works and main building works
- from lower ground floor to the 8th floor (comprising building
platforms, bus loading/ unloading bays, hotel facilities such as
lobby and events hall, cinema and entertainment outlets, car parks,
sports and fitness club and dental specialist centre)
89.64
(2) External works(comprising road and drainage, external water
reticulation, primary soil drainage, mechanical and electrical
infrastructure and landscaping works), design and construction
contingency expenses and preliminaries (i.e. construction site
overheads)
13.96
B. Other costs (1) Professional fees (e.g. architects, civil and
structural engineers, mechanical and electrical engineers,
landscape architects and town planning) and project management
fees
19.10
(2) Statutory contribution and planning fees payable to
authorities (i.e. Tenaga Nasional Berhad, Indah Water Konsortium,
and Lembaga Air Perak)
1.63
(3) Marketing and promotions (to market and promote the Terminal
Kampar to potential tenants and to the public)
4.00
Total cost 128.33
Source: Company, Kenanga Research
IPO Proceeds to be used for the business expansion pl an a.k.a
Terminal Kampar Description RM'm Professional fees (1) 11.50
Construction works (2) 8.50 Total 20.00 (1) Part payment for total
estimated professional fees of RM19.1m, which includes Architects,
Civil & Structural Engineers, Mechanical & Electrical
Engineers and Project Management fees. This includes: (i) First
progressive payment of approximately RM1.9m payable to appoint the
professionals and initiate the construction project; (ii) Fees
payable to architects and relevant professionals for services
rendered to prepare and submit the architectural plans and the
relevant documents to the respective authorities for approval; and
(iii) Fees to respective professionals to perform periodical
supervision and inspection work, attending site meetings and
notification to the relevant authorities on the progress of the
work. (2) Construction works consists of: (i) The cost of piling
works for the whole integrated public transportation terminal which
is estimated to be RM5.2m; and (ii) The estimated RM3.3m, being
part payment of the total construction cost of the main building
works of approximately RM89.64m.
Source: Company, Kenanga Research
Expect sustainable demand from Kampar, leveraging on its growing
education hub. Kampar town has been identified as a suitable
location for the next terminal due to its ever growing population
driven by increased economic activities from: (i) higher learning
institutions such as TAR College, Universiti Tunku Abdul Rahman
(UTAR), Westlake International School (WIS), while upcoming
institutions include UCSI University and Metropolitan College, (ii)
new townships and development plans (ex: Taman Bandar Baru), (iii)
various hypermarkets to cater to the increasing demand (i.e. Tesco,
Giant, Econsave), and (iv) its strategic location close to the
North-South Expressway.
Tax breaks allow for low effective tax rates. Due to the nature
of business which requires large sums of capex invested for
projects that serve national interest, Perak Transit is a
beneficiary of Approved Service Project Status (ASPS) tax whereby
Perak Transit is able to claim up to 60% of capex invested from
FY12-17 (5-year period). Historically, the company has received a
total tax incentive of RM49.4m for FY13-15 and has a remaining
RM88m to go which can be progressively utilised over a longer
period. The Group is going to apply for the ASPS tax incentive for
the new Terminal Kampar and we are confident they will be
successful as it is a national interest project; which we have yet
to impute. For now, we expect the effective tax rate in FY16,17-18E
to be 9%,7%-7%.
Benefiting from Government incentives. Besides tax savings, the
company also receives government grants, and during the
construction of Terminal AmanJaya, it received a one-time
government grant of RM9.98m (which is amortised over a 50 year
period) from the Public Private Partnership Unit of the Prime
Ministers Department in 2012. Perak Transit also receives funding
from Interim Stage Bus Support Fund (ISBSF) is financial assistance
provided by SPAD to improve the quality of bus services that has
totalled RM9.54m from FY13-16 which translates to c.RM2m revenue
p.a. which we have accounted for in our estimates. Other
initiatives by SPAD include Stage Bus Service Transformation (SBST)
programme whereby The Combined Bus being the network operator will
be paid cost per vehicle-km for 16 stage bus routes in Ipoh, to
expand bus route coverage by shifting away from the fare-box
revenue model, to the gross cost service delivery model. This is
expected to translate to an additional RM1.9-3.8m in total in
FY16-17E; which we have accounted for in our estimates.
Additionally, Perak Transit receives sales tax exemption of CKD bus
and air conditioning equipment of RM2.44m from MoF for the purchase
of CKD buses and air conditioning equipment during FY13-15 and GST
exemption of RM0.57m from MoF for the purchase of CKD buses and air
conditioning equipment during FY15-FY16, which provides cost
savings on cost purchases, depreciation and operating expenses of
bus services.
Capex assumptions of RM38-80m in FY16-17E . All in, we are
expecting the Group to allocate RM140m for CAPEX over FY16-18E,
which are mainly for the development of Terminal Kampar (total cost
RM128m) of which RM20m will be raised via the IPO, including an
additional RM12m for the acquisition of 25 new express busses which
we expect by FY17. As such, we are expecting the group to allocate
capex of RM38-80m in FY16-17E, while the remainder of RM22m in
FY18E which will be funded via borrowings and internally generated
funds.
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 10 of 17
Expect FY16, 17-18E net gearing of 0.3 4, 0.56-0.50x…The Group’s
net gearing is expected to rise over the next one to two years due
to progressive draw down on its borrowing facilities for the
construction of the new Terminal Kampar which is set to be
completed by mid-2018. We believe its net gearing will normalise
closer to 0.30x by FY21 post construction of Terminal Kampar
assuming no further major capex plans. However, it appears that the
Group has expansion plans for Terminal AmanJaya, and possible
development of other terminals post Terminal Kampar, which we have
yet to build into our estimates.
…which we are comfortable given a healthy interest coverage
ratio of 4.2, 4.8-5.2x in FY16, 17-18E. Despite high capital
commitments for the construction of its terminals, Perak Transit
has maintained extremely healthy interest coverage ratios of
>3.0x since FY14 while we are expecting FY16, 17-18E interest
coverage ratio of 4.2, 4.8-5.2x which is more than comfortable
given their strong cash-flow income streams. Note that the group
has very healthy receivables day coverage of 21-58 days over
FY14-16E.
Interest Coverage Ratio
Source: Kenanga Research
Listing to increase credibility and funding options . The public
listing is a positive as it would increase the Group’s credibility,
especially in securing new deals from other government agencies and
Project Facilitation Fee’s deals. Listed companies are more
transparent when it comes to information disclosure and would have
been vetted through by the Securities Commission during the listing
process. Secondly, public listing will also mean more funding
options in the future which is handy given that terminal
developments requires high capex. As Perak Transits business model
of Terminal management is capital intensive, especially during the
construction phase of new terminal, the Group will require added
avenues for funding such as rights issuances, bond issuances, etc.
At this juncture, Perak Transit is set on expanding Terminal Kampar
and buying new buses, while longer term and not so concrete plans
include adoption of new A&P platforms to increase A&P space
at Terminal AmanJaya and further expansions of Terminal AmanJaya’s
built-up area.
OUTLOOK
Terminal AmanJaya a commercial and lifestyle hub. The Group
plans to evolve Terminal AmanJaya into a commercial and lifestyle
hub by increasing retail operations on 136,721sf of undeveloped
land at Terminal AmanJaya, currently. The expanded section of the
terminal will increase gross building area (GBA) by 166,443sf (+80%
of the existing GBA), while increments of GLA is yet to be
finalised. However, this certainly bodes well in terms of
additional A&P space revenue which is the Group’s main earnings
driver, as well as increments to rental of GLA. Plans for the
extension of Terminal AmanJaya is likely by FY19, post the
completion of Terminal Kampar.
Expecting additional revenue streams from the rental of A&P
space after adopting new A&P platforms. Perak Transit is
continuously expanding efforts to increase A&P space, and plans
to adopt new platforms for A&P such as digital platforms with
digital signage in infrastructure, as well as media capabilities
that can leverage on consumers mobile, social and online
technologies. This would directly increase A&P space, accreting
directly to the Groups revenue and is part of the longer term
initiatives.
RISK
Non approval of business licences. The Group will not be able to
carry out its core operations to serve as a terminal as its
Terminal License for its terminal operations by SPAD has yet to be
granted considering that SPAD has yet to finalise its internal
regulatory framework for the issuance of any bus terminal license
in Peninsular Malaysia. SPAD has confirmed that pending the
finalisation of the internal framework, there will not be any
penalties for terminals operating without such a license. We
believe the likelihood of Terminal AmanJaya obtaining a terminal
license is just about “in the bag” considering these factors; (i)
Terminal AmanJaya has already commenced operations with relevant
business licenses and obtained a certificate of fitness (CF) for
the premises, (ii) SPAD and the state government has noted the
commencement of terminal operations on Sept 2012, (iii) SPAD’s
circular stated that all express busses entering and exiting Ipoh
must drop off and pick up passengers at Terminal AmanJaya, unless
special permission is given, and (iv) the terminal has been
gazetted by the Mayor of Ipoh City as the terminal for public
service vehicles (busses and taxis) from 31st July 2012. In June
2016, SPAD commenced the registration process for the licencing of
all terminals, and on 1 July 2016, The Combined Bus submitted its
formal application for the Terminal Licence.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
FY13 FY14A FY15A FY16E FY17E FY18E
Interest coverage ratioX
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 11 of 17
Non-renewal of bus route permits. Not being able to renew bus
route permits or revocation may pose an impact on earnings. The
management will do their best to achieve timely approvals of such
permits and have to date not encountered difficulty in renewing
vehicle permits, bus route permits and business licences in the
past. Although there is a possibility that there may be delays,
modifications or impositions of further conditions for the renewal
of such licences, we do not expect it to have a significant adverse
impact on the Group’s earnings due to managements competencies in
ensuring these conditions are met, whilst renewal or expiry of
vehicle permits are specific to the affected license only, and thus
shall not affect the validity of other vehicle permits.
Dependency on major customers and other risks. We believe the
likelihood of Terminal AmanJaya not being able to secure A&P
rental in coming years is minimal due to sustained demand for
A&P space as passenger traffic remains strong. Terminal
AmanJaya also includes retail and F&B outlets that will
continue to drive traffic to the terminal. In terms of risk of
tenancy renewals, the bulk of the Group’s tenancies are mainly for
2-year periods meaning Terminal AmanJaya will see a fairly
significant rate of expirations each year, with 27%, 47% and 25%
expiring in FY16,17-18. That said, rental revenue from tenants make
up
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Perak Transit Berhad IPO Note 20 September 2016
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APPENDIX
Shareholding Effects Promoters and
substantial shareholders Nationality /
Place of incorporation
Before IPO After IPO (1)
Direct Indirect Direct Indirect
No. of Shares ('000)
%(2) No. of Shares ('000)
%(2) No. of Shares ('000)
%(5) No. of Shares ('000)
%(5)
CBS Link Malaysia 190,000 21.16 - - 190,000 16.62 - -
Dato' Sri Cheong Kong Fitt Malaysian 178,263 19.85 264,658 (3)
29.47 (3) 178,263 15.60 264,658 (3) 23.16 (3)
Dato' Cheong Peak Sooi Malaysian 18,551 2.07 - - 18,551 1.62 -
-
Datin Sri Lim Sow Keng Malaysian 74,658 8.31 368,263 (4) 41.01
(4) 74,658 6.53 368,263 (4) 32.22 (4)
Gemas Perunding Malaysia 55,481 6.18 - - 55,481 4.85 - -
Muamalat Venture Malaysia 190,476 21.21 - - 190,476 16.67 -
-
MTD Capital Malaysia 100,000 11.14 - - 100,000 8.75 - -
Senandung Asas Malaysia 52,593 5.86 - - 52,593 4.60 - -
Notes: (1) Assuming after the Proposed Public Issue. (2)
Computed based on our enlarged issued and paid-up share capital of
897,948,000 Shares after the New Share Issuance as stated in
Section 1.6.1 herein and before our IPO. (3) Deemed interested
pursuant to his interest held in CBS Link via CKS Maju pursuant to
Section 6A of the Act and the direct interest of his spouse, Datin
Sri Lim Sow Keng. (4) Deemed interested pursuant to her interest
held in CBS Link via CKS Maju pursuant to Section 6A of the Act and
the direct interest of her spouse, Dato' Sri Cheong Kong Fitt. (5)
Computed based on our enlarged issued and paid up share capital of
1,142,948,000 Shares after our IPO.
Source: Company, Kenanga Research
Perak Transit subsidiaries and their respective prin cipal
activities Company name Date/ Place of incorporation Issued and
paid-up share
capital (RM)
Effective equity
interest (%)
Year commenced operations
Principal activities
CKS Bumi 2 July 2008 / Malaysia 500,000 69.99 2008 Bus operator,
operator of petrol station and providing management services
CKS Labur 5 March 2008 / Malaysia 250,000 100.00 2008 Operator
of petrol station
IpohLink 23 July 2008 / Malaysia 300,000 100.00 2008 Providing
management services for bus operations
Star Kensington 7 September 2006 / Malaysia 350,000 95.71 2006
Operator of petrol station
Syarikat Sumber Manusia
11 September 2009 / Malaysia
100,000
100.00
2009 Providing services of human resource management
The Combined Bus
2 August 2006 / Malaysia
55,600,003 99.89 2006 Operators of bus terminal, petrol station
and public transportation
Terminal Urus 25 April 2012 / Malaysia 100,000 100.00 2012 Bus
Terminal Management
Source: Company, Kenanga Research
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Perak Transit Berhad IPO Note 20 September 2016
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Key Milestones and Achievement Year Key milestones and
achievement 2006 • Incorporation of The Combined Bus 2008 •
Incorporation of Perak Transit 2009 • The Combined Bus initiated
the Consortium Arrangement with General Omnibus, Ipoh Omnibus and
Kinta Omnibus, and
consolidated the bus services operations of General Omnibus,
Ipoh Omnibus and Kinta Omnibus under The Combined Bus. • The
Combined Bus submitted an application to the Ipoh City Council to
seek for planning approvals to construct an express bus
terminal in Meru Raya, Ipoh. 2010 • The Combined Bus received
approval for the abovementioned application and commenced
construction of integrated public
transportation terminal. • Consortium Arrangement was formalized
between The Combined Bus, General Omnibus, Ipoh Omnibus and Kinta
Omnibus. • Completed the acquisitions of IpohLink and Syarikat
Sumber Manusia to provide management services for public bus
services
operations and to provide human resource management,
respectively. • Acquired The Combined Bus.
2011 • The Consortium Agreement was noted by LPKP. • Signed a
Supply and License Agreement with Boustead Petroleum Marketing Sdn
Bhd to operate a BHP petrol station at Terminal
AmanJaya 2012 • Terminal AmanJaya was gazetted by the Mayor of
Ipoh City as the station for public service vehicles (bus and taxi
services) with
effect from 31 July 2012. • Acquired CKS Bumi which held 50
stage bus permits and 50 express bus permits and CKS Bumi was noted
by SPAD to join as a
member of the Consortium Arrangement. • Qualified for the SPAD’s
ISBSF, a fund established by the Government of Malaysia to improve
the quality of bus services. • Applied and received approval for
Approved Service Project Status for The Combined Bus. • Received an
approval-in-principle from Public Private Partnership Unit of the
Prime Minister Department, a Government grant for
infrastructure cost of the integrated public transportation
terminal. • Completed the acquisitions of CKS Bumi, CKS Labur and
Star Kensington, wherein the services is expanded to include
petrol
stations operations. • Completed the construction of Terminal
AmanJaya and commenced operations of Terminal AmanJaya, including
the operations of
BHP petrol station located within the terminal compound. 2014 •
Terminal AmanJaya’s status as the only gazetted express bus
terminal in Ipoh, Perak is recognized by SPAD in the SPAD
Circular.
The release of this SPAD Circular is to centralize express bus
operations in Terminal AmanJaya, and provide improved public
transportation services to passengers in the form of comfort,
safety, access to improve travel information and notification, as
well as enhanced public transportation network.
• Completed the acquisition of Terminal Urus to provide bus
terminal management services. 2015 • Signed a Retail Trading
Agreement with Petron Malaysia for the operations of a Petron
petrol station located at Lubok Merbau,
Kuala Kangsar and commenced operations in August 2015. •
Received Letter of Intent from SPAD on the appointment of The
Combined Bus as network operator for Ipoh under the SBST
Programme for a period of 8 years. 2016 • The Combined Bus
entered into a conditional sale and purchase agreement for the
purchase of 2 parcels of land measuring
approximately 3.72 acres which are situated in Mukim of Kampar,
Daerah Kampar, Perak. • The Combined Bus then entered into a
conditional agreement with SPAD pursuant to the appointment as a
bus network operator
for Ipoh under the SBST Programme, following the receipt of the
Letter of Intent from SPAD in 2015. The Group has commenced the bus
operations of six (6) routes under SBST Programme since 1 June
2016.
Source: Company
Profile of Key Management Personnel Name Position Background
Dato' Sri Cheong Kong Fitt Managing Director
• Diploma in Business from the School of Marketing, Ipoh in
1986
• Currently persuing Masters of Art in International Business in
York St John University, England
• 20 years of working experience in public bus terminal
operations
• Began career as supervisor in Choong Sam Tin Mine (1980)
• Joined Swee Keong Construction Pte Ltd in 1985 as a supervisor
tasked with logistics planning • Joined The Combined Bus Services
(Partnership), operator of Stesen Bas Jalan Kidd as
supervisor in 1992 where he was responsible for managing the
public bus terminal operations.
• In 2006 to 2009, was instrumental in leading the bus services
operations of General Omnibus, Ipoh Omnibus, and Kinta Omnibus
• Founded Perak Transit in 2008, and commeced operations at
Terminal AmanJaya in 2012
Dato' Cheong Peak Sooi Executive Director
• Holds Certificate in Business Management from MDIS Business
School, Singapore in 1988
• Commenced career as site manager for G&C Civil Engineering
Pte Ltd in Singapore, responsible for overseeing the Company's
daily construction work up to 2000.
• In 2001, took position as filed service representative in a
multinational company in Singapore (Amerton Pte Ltd) liasing with
clients, preparing proposals for clients, supervising and
monitoring the installation of piping, quality checks and
handover.
• Joined Star Kensington in 2008 as a director responsible for
petrol station operations, and subsequently resigned in 2011.
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Perak Transit Berhad IPO Note 20 September 2016
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• Appointed as director of The Combined Bus in 2011 responsible
for monitring the construction and day-to-day operations of
Terminal AmanJaya.
Loh Kwang Yean Chief Financial Officer
• Graduated with a Bachelor of Accounting with honours from
University Utara Malaysia in 1999.
• Became a member of the Malaysian Institute of Accountants. •
Began his career as an Audit Assistant with Deloitte KassimChan in
1999. • In 2000, was promoted to Audit Senior II and Audit Senior I
in 2001.
• In 2002, joined P.I.E. Industrial Berhad as a Project Officer
in the Corporate Finance department.
• In 2004, joined Dufu Technology Corp. Berhad as a Group
Accountant. • In 2008, was promoted to Finance Manager and also
headed the due diligence team in a cross-
border acquisition of a manufacturing plant in China which has a
holding company in Hong Kong, Futron Techonology Limited.
• Founded Northern Bridge Advisory Sdn Bhd, an independent
advisory company. • Joined LNG Resources Berhad as an Executive
Director. • Joined Perak Transit as Chief Financial Officer. •
Resigned as Director in Northern Bridge Advisory Sdn Bhd on 1st
October 2015.
Jennifer Chin Yi Teng
Administration and Finance Manager
• Graduated with a Bachelor of Science (Hons) in Applied
Accounting from Oxford Brookes University, United Kingdom, in
2011.
• Currently pursuing professional qualification with the
Association of Chartered Certified Accountants.
• Began her career as an Account Executive with Kin Kun Group
Sdn Bhd. • Joined Perak Transit as an Account Executive • In 2014,
was promoted to Administration and Finance Manager.
Nur Liana Binti Ahmad Tarmizi Terminal Manager
• Obtained Bachelor of Civil Engineering with honours from
University Tenaga Nasional, Malaysia in 2012.
• Obtained a Master Degree in Management from University of
Bath, United Kingdom in 2014. • Began her career as a manager with
Impian Atah Enterprise in 2012. • Joined Perak Transit as terminal
manager in March 2015.
Chen Lee Keen Bus Operations Administrator
• Graduated with a Sijil Pelajaran Malaysia from SMJK Ave Maria
Convent, Ipoh, Perak in 1982.
• Has around 24 years working experiences in the public
transportation industry. • Started her career in 1984 with Homegym
Pte.Ltd. • In 1986, started working as a shipping executive with
CDF Chimie Pte.Ltd, a Singapore
company based in Petaling Jaya.
• In 1991, joined Ipoh Omnibus as a chief clerk and was
in-charge of daily bus operations.
• In 1998, was promoted as personal assistant of the
Director.
Source: Company
Profile of Directors Name Position Background Tan Sri Dato'
Chang Ko Youn
Independent Non-Executive Chairman
• Graduated with a Bachelor of Laws (Honours) from the
University of Hull, England in 1981 • In 1982, was called to the
English Bar as a Barrister-At-Law of Lincoln's Inn, London and
Malayan Bar in 1983. • Began his career as a lawyer in Ipoh in
1983 until 1995 where he was attached to Chang Ko
Youn & Co. • In 1987, was appointed as Councillor of the
Kuala Kangsar District Council until 1995. • Assumed the political
position of Perak Gerakan Youth Chairman until 1996, and
current
position of Committee Member of Perak State. • In 1987 was
elected as the Chairman of Sungai Siput Division until 2008. • In
1996, assumed 3 political positions as the National Youth Chairman,
Vice-Chairman of
Perak State and Committee Member of Central Committee until the
years 1999, 2002 and 2013 respectively.
• In 1995, held the position as Member of Perak State Executive
Council until 2008. • Held 2 important political positions in 1999,
as Deputy Secretary-General of the Central
Committee and Head of its Legal Bureau until the years 2005 and
2008. • In 2002 until 2005, he assumed the position of Secretary of
the Perak Parti Gerakan. • In 2005, assumed 2 political positions
as Vice-President of Parti Gerakan National Committee
and Chairman of the Perak State until 2008 and 2013
respectively. • Held onto his current position of Chairman of
Beruas Division since 2008. • Was appointed as the Advisor of the
Chief Acting President of the Parti Gerakan for a few
months, and been appointed to current position as its National
Advisor. • Since 2014, has resumed his legal practice at Toh Theam
Hock & Co in Ipoh and appointed
as the Chairman of Yayasan Penjaja Dan Peniaga Kecil 1 Malaysia
(YPPKM).
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 15 of 17
Dato' Wan Asmadi Bin Wan Ahmad
Non-Independent Non-Executive Director
• Graduated with a Bachelor degree in Business Administration
with a major in Accounting from Temple University, Philadelphia,
USA in 1989.
• Graduated with a Masters of Business Administration
specializing in Finance from the same university.
• Began career as an assistant for tax and audit works with
Pricewaterhouse Tax Service (M) Sdn Bhd in 1989.
• In 1990, entered the oil and gas industry, and joined Mobil
Oil (M) Sdn Bhd as a Financial Executive.
• In 1991, joined Petronas Carigali Sdn Bhd as the Unit Head of
Budget and Management Accounting of the Peninsular Malaysia
Operations.
• In 1996, entered the investment banking industry and joined
Maybank Investment Bank Berhad as a Deputy Manager of the Corporate
Finance Department.
• In 2002, joined Affin Investment Bank Berhad as an Assistant
General Manager. • Joined Malaysian International Merchant Bankers
Berhad from 2002 to 2004 as a General
Manager. • In 2004, returned to Maybank Investment Bank Berhad
as the head of the newly setup
Equities Market Division. • Was promoted to become the Director
of Dealing in Maybank Securities Sdn Bhd • Was assigned to set-up
and head the Islamic Capital Market, a division independent from
the
conventional Debt Market Division. • Appointed as the Chief
Operating Officer of Anfaal Capital in 2009. • Assumed his current
position as Managing Principal, Director and Co-Founder of DWA
Advisory Sdn Bhd. • Founded DWA Private Equity Sdn Bhd and been
serving as the non-Executive Chairman. • Currently a member of the
Market Participants Committee of Bursa Malaysia.
Mohd Annas Bin Md Isa Non-Independent Non-Executive Director
• Graduated with a Bachelor of Finance (Honours) from University
Teknologi MARA, Malaysia, in 2000.
• Began his career as a dealer representative with OSK
Securities Berhad in 2000. • Joined Aseambankers Malaysia Berhad as
a Senior Executive. • In 2006, joined Kenanga Investment Bank
Berhad. • In 2009, joined AmInvestment Bank Berhad as a Manager in
the Equity Capital Market
division. • In 2013, joined Bank Muamalat Malaysia Berhad as the
Head of Equity Capital Market/
Private Equity in Investment Banking division. • Has more than
15 years of experience in various capacities in the equity capital
market
division and investment banking. Ng Wai Luen Independent
Non-Executive Director
• Graduated with a Bachelor of Business (Accounting) with
distinction from RMIT University, Australia in 1992.
• In 1994, completed the Certified Public Accountant Australia
examinations. • Completed Malaysia Institute of Certified Public
Accountant examinations. • Is a member of CPA Australia, MICPA and
a Chartered Accountant registered with the
Malaysian Institute of Accountant. • Began his career with KPMG
Malaysia in 1993. • Joined OKA Corporation Berhad as Finance
Manager. • Was appointed as joint company secretary. • In 2002, was
promoted to General Manager and Chief Financial Officer. • Was
appointed as head of the risk management committee from 2003 to
2011. • Was appointed as head of the strategic business management
team, member of a
remunerations committee and member of the Employee Share Option
Scheme from 2004 to 2011.
• In 2012, joined Starken AAC Sdn Bhd and G-Cast Concrete Sdn
Bhd, direct and indirect subsidiaries of Chin Hin Group Berhad as
an executive director.
Source: Company
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Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 16 of 17
Income Statement Financial Data & Ratios
FY Dec (RM m) 2013A 2014A 2015A 2016F 2017F 2018F FY Dec (RM m)
2013A 2014A 2015A 2016F 2017F 2018F Revenue 64.4 77.6 74.1 79.4
89.6 97.0 Growth (%)
EBITDA 14.3 25.6 33.5 36.9 43.8 50.8 Revenue n.a. 20.5 (4.5) 7.1
12.9 8.2
Depreciation -5.2 -5.8 -6.7 -6.8 -7.2 -9.4 EBITDA n.a. 79.2 30.8
10.3 20.3 15.6
EBIT 9.1 19.8 26.7 30.1 36.7 41.4 Operating Income n.a. 118.1
34.8 12.7 21.7 12.9
Interest Income 0.0 0.0 0.0 0.0 0.0 0.0 Pre-tax Income n.a.
211.3 44.7 19.1 26.4 15.6
Interest Expense -4.8 -6.5 -7.5 -7.2 -7.7 -7.9 Net Income n.a.
87.0 42.3 8.8 29.8 15.0
Others 0.9 0.9 1.8 1.8 2.0 2.2 Exceptionals/FV 0.0 0.0 0.0 0.0
0.0 0.0 PBT 4.3 13.3 19.3 22.9 29.0 33.5 Profitability (%) Taxation
2.9 0.2 -0.1 -2.1 -1.9 -2.3 EBITDA Margin 22.2 33.0 45.1 46.5 49.5
52.9
Minority Interest 0.0 0.0 0.1 0.0 0.0 0.0 Operating Margin 14.1
25.5 36.0 37.9 40.9 42.7
Net Profit 7.2 13.5 19.2 20.9 27.1 31.1 PBT Margin 6.6 17.2 26.0
28.9 32.3 34.5
Net Margin 11.2 17.4 25.9 26.3 30.2 32.1
E. Tax Rate 68.7 1.3 (0.3) (9.0) (6.5) (7.0)
Balance Sheet ROE 9.9 16.5 16.5 17.7 12.8 13.0
FY Dec (RM m) 2013A 2014A 2015A 2016F 2017F 2018F ROA 3.5 6.0
7.5 7.1 7.6 7.7 Fixed Assets 174 210 226 257 329 350 Intangibles 3
2 2 2 2 2 Other FA 7 6 7 7 7 7 DuPont Analysis Inventories 1 1 1 1
1 1 Net margin (%) 11.2 17.4 25.9 26.3 30.2 32.1
Receivables 3 5 12 13 14 16 Assets Turnover (x) 31.4 34.5 29.0
27.2 25.3 24.1
Other CA 2 1 7 7 7 7 Leverage Factor (x) 2.8 2.7 2.4 1.8 1.7
1.7
Cash 13 20 12 29 31 30 ROE (%) 9.9 16.5 17.7 12.8 13.0 13.5
Total Assets 203 244 267 316 392 412 Leverage Payables 4 2 3 3 3
3 Debt/Asset (x) 0.40 0.42 0.45 0.31 0.39 0.36
ST Borrowings 12 3 21 25 25 25 Debt/Equity (x) 1.12 1.12 0.95
0.49 0.70 0.62
Other ST Liability 4 3 8 7 7 7 N Debt/(Cash) 68.3 81.5 108.0
67.9 121.8 119.9
LT Borrowings 62 94 97 72 128 125 N Debt/Eqty (x) 0.94 0.90 0.85
0.34 0.56 0.50
Other LT Liability 16 14 12 10 10 10 Minority Int. 0 0 1 1 1 1
Valuations Net Assets 73 90 126 199 219 243 Core EPS (sen) 0.6 1.2
1.7 1.8 2.4 2.7
NDPS (sen) 0.0 0.0 0.0 0.46 0.59 0.68
Share Cap 50 50 71 114 114 114 BV/share (RM) 0.06 0.08 0.11 0.17
0.19 0.21
Reserves 6 39 56 85 105 128 Core PER (x) 23.78 12.72 8.93 8.22
6.33 5.50
Shareholders’ Equity
73 90 126 199 219 243 N. Div. Yield (%) 0.0 0.0 0.0 3.0 4.0
4.5
PBV (x) 2.3 1.9 1.4 0.9 0.8 0.7
Cashflow Statement EV/EBITDA (x) 16.2 9.7 8.3 6.5 9.7 8.3
FY Dec (RM m) 2013A 2014A 2015A 2016F 2017F 2018F Operating CF
10 21 30 33 41 48
Investing CF -45 -9 -29 -40 -80 -30
Financing CF 43 4 -9 24 41 -18
Net Change in Cash 8 16 -8 17 1 -1
Free Cash Flow -35 12 1 -5 -39 18
Source: Kenanga Research
-
Perak Transit Berhad IPO Note 20 September 2016
PP7004/02/2013(031762) Page 17 of 17
Stock Ratings are defined as follows: Stock Recommendations
OUTPERFORM : A particular stock’s Expected Total Return is MORE
than 10% (an approximation to the 5-year annualised Total Return of
FBMKLCI of 10.2%). MARKET PERFORM : A particular stock’s Expected
Total Return is WITHIN the range of 3% to 10%. UNDERPERFORM : A
particular stock’s Expected Total Return is LESS than 3% (an
approximation to the 12-month Fixed Deposit Rate of 3.15% as a
proxy to Risk-Free Rate). Sector Recommendations*** OVERWEIGHT : A
particular sector’s Expected Total Return is MORE than 10% (an
approximation to the 5-year annualised Total Return of FBMKLCI of
10.2%). NEUTRAL : A particular sector’s Expected Total Return is
WITHIN the range of 3% to 10%. UNDERWEIGHT : A particular sector’s
Expected Total Return is LESS than 3% (an approximation to the
12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free
Rate). ***Sector recommendations are defined based on market
capitalisation weighted average expected total return for stocks
under our coverage.
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