Prolintas Infra Business Trust (PLINTAS MK) – Riding on Klang Valley’s Expanding Traffic Volume
Recommendation: BUY
- Target Price: MYR 1.13
- Date of Report: September 8, 2024
- Broker Company: Maybank Investment Bank Berhad
Investment Thesis:
Prolintas Infra Business Trust (PIBT) offers exposure to toll highway assets in the Klang Valley, benefiting from the region’s growing traffic volume due to urbanization and economic activities. The trust has four major intra-urban toll highway assets, including the Ampang-Kuala Lumpur Elevated Highway (AKLEH), Guthrie Corridor Expressway (GCE), Lebuhraya Kemuning-Shah Alam (LKSA), and Sistem Lingkaran-Lebuhraya Kajang (SILK).
Key factors driving the BUY recommendation include:
- Stable Cashflow Generating Assets: PIBT’s toll highways have a combined market share of 15.7% by traffic volume in the Klang Valley as of 2021. Following restructuring of its concession terms in October 2022, the trust forecasts sustained cash flow, with higher toll rates to be implemented in 2033 and 2043.
- Potential Acquisitions: The trustee-manager does not rule out future acquisitions of toll highways, both domestically and internationally, which would further drive growth.
- Long Concession Periods: The four toll highways have an average remaining concession period of 31 years, offering long-term visibility on future toll revenues and distribution to unitholders.
Financial Overview:
- FY24 Forecasts: PIBT forecasts a net profit of MYR 11 million in FY24 and MYR 12 million in FY25, after an estimated headline loss of MYR 276 million in FY23.
- Dividend Yield: For FY24, PIBT plans to distribute MYR 70 million, which translates to a 7.0% dividend yield.
- Valuation: Using a discounted cash flow (DCF) methodology with a cost of equity of 11.2%, the equity value is estimated at MYR 1.24 billion, corresponding to a target price of MYR 1.13.
Thank you
