Growing focus on Perak Transit following TMS contract
KUALA LUMPUR: Analysts are paying attention to Perak Transit Bhd (Perak Transit) after the group secured its first terminal management services (TMS) contract to co-manage Terminal Sentral Kuantan with Energetic Point Sdn Bhd (Energetic Point).
Kenanga Investment Bank Bhd (Kenanga Research) said the maiden TMS contract marks a promising start to its TMS initiative.
Energetic Point will pay the group RM1.2 million in the first year with three per cent annual increment for nine years up to January 31, 2030.
The group’s initial investment of RM3.05 million will be capitalised and depreciated over the period.
“We view the contract as a positive for the group with payback period of less than three years, profit before tax margins of 65 to 75 per cent, and profit after tax margin of over 60 per cent,” it said.
“Furthermore, because the renovation works have already been carried out by Energetic Point, Perak Transit will start receiving its first cash payment of RM100,000 in February 2021.”
Kenanga Research viewed TMS as a profitable and stable new revenue stream for Perak Transit, as by managing third party terminals, the group incurs minimal capex as compared to building their own integrated public transport terminal (IPTT) with gross development costs in excess of RM100 million.
“Moreover, as the group continues adding new layers of earnings from new TMS contracts, the previously secured contracts will already be contributing and growing. The TSK contract is a step in the right direction for the Group to achieve a recurring and cashgenerative earnings profile.”
Kenanga Research saw that this is the first of several TMS contracts to be secured by Perak Transit, with TSK being one of the 90 odd IPTTs and bus terminals in West Malaysia alone.
“As the only listed company in the bus services and terminal management business, the group faces little competition in managing third party terminals,” it continued. “Terminal Meru Raya has recently been awarded “Grade A” terminal status – making it one of only two IPTTs in Malaysi), which is a testament to the management’s experience and capability.
“We are confident that the group can secure another four to five TMS contracts in FY21 and more beyond that.”
Meanwhile, AmInvestment Bank Bhd (AmInvestment Bank) also liked Perak Transit for its unique business model, which is the operation of modern public transport terminals that emulate airports with spacious and brightly lit shopping, dining and waiting areas, and clean public facilities, particularly the washrooms.
“This entices visitors and commuters to spend more money and time in the terminal prior to their departure or upon their arrival, or while sending off or picking up their loved ones,” it said in its own report.
“This captive traffic is monetised in the form of rental incomes from commercial units and advertising space within the terminal.