Perak Transit Bhd (KLSE: PTRANS) is principally involved in operations of integrated public transportation terminal and provision of public bus services. The Group is also involved in the petrol sales business with the operations of several petrol stations. In this article, we will take a closer look at the business, management and financial aspects of the Group, to see if it is worth an investment.
Transit’s crown jewel is Terminal AmanJaya. It houses 17 express bus departure
bays, 5 express bus arrival bays and 40 holding bays within a 3-storey building
complex. Total building area is 208,802 sq. ft. of which 49,129 sq. ft. can be
leased to potential tenants and the remaining area use as promotional space for
rental income. There is also an undeveloped area at Terminal AmanJaya,
measuring 135,721 sq. ft, for future expansion.
As far as
revenue is concerned, Perak Transit has 3 major income sources, i.e.
Integrated public transportation terminal operations; i) Rental of advertising and promotional (A&P) spaces; ii) Rental of shops and kioks; iii) Project facilitation fee; and iv) Others such as bus and taxi entrance fee and fee imposed for usage of the basement car park
Providing public stage bus and express bus services and bus charter services; and
Petrol station operations in Ipoh, Lahat, Tanjung Rambutan and Kuala Kangsar, Perak.
year (“FY”) 2018, each of the 3 divisions provide significant revenue to the
Group. However, at the segment results level, the terminal operations provide
the bulk of the segment earnings (92%) given the higher margin from rental and
project facilitation fees versus bus services and petrol station operations.
you could see Perak Transit as a toll-gate business. A bus terminal is a
strategic location where traffic is congregated. The traffic of people through
the terminal is their “asset” so to speak.
As the only
gazetted express bus terminal in Ipoh, Terminal AmanJaya is situated right
beside the North South Expressway and has experienced a steady growth in
and this has spelled opportunities for many small businesses from a variety of
niches, from F&B and retail outlets to entertainment centres and hotel
Transit plans to replicate its bus terminal to different parts of Malaysia. Its
expansion plans include Terminal Kampar Putra, Terminal Bidor, Terminal Tronoh
and expansion of Terminal AmanJaya phase 2.
Kampar Putra is Perak Transit’s immediate growth driver. The terminal is
strategically located 5 minutes away from University Tunku Abdul Rahman (UTAR)
Kampar Campus, and is an in integrated lifestyle hub, which will have its own
hotel and other facilities such as badminton courts, gym, cinema, library and
bowling alley. It is expected to be a new commercial hub and gathering place
for UTAR students.
Kampar Putra (Phase 1) has commenced its terminal operations at the end of the
second quarter of 2019 and is expected to be fully opened in March 2020 with a
complete certificate of completion and compliance to be received by Q1 2020.
Cheong Kong Fitt is founder and managing director of Perak Transit. He is responsible
for the Group’s day to day management as well as setting the corporate vision
and direction, including planning and implementing strategic business plans for
the Group. Dato’ Sri Cheong Kong Fitt’s brother, Dato’ Cheong Peak Sooi, also
serves as an executive director of Perak Transit. Datin Sri Lim Sow Keng is
Dato’ Sri Cheong Kong Fitt’s wife.
As at 29
March 2019, the Cheong family effectively own 39.27% stake in Perak Transit and
are the Group’s largest shareholders.
2018 annual report)
Dato’ Sri Cheong Kong Fitt has recently on 17 October 2019 acquired an
additional 1,000,000 shares, bringing his direct interest in Perak Transit to
247,080,605 shares (17.37%).
Measure 1: Growth in revenue and profits
Transit has seen respectable growth in revenue and net profit after tax, at
compounded annual growth rates (CAGR) of 15.3% of 23.3% respectively from
FY2015 to FY2018. As growth in net profit after tax is slightly higher than growth
in revenue, we believe that management is efficient in managing its costs. In
addition, if we were to annualise the 3Q 2019 results, we can expect the Group
to achieve improved financial performance in FY2019.
Measure 2: Profitability
Transit enjoys decent net profit margins of 23.9% – 31.5% due to its
monopolistic business advantage of being the only gazetted bus terminal in Ipoh.
Return on equity ratios are also at double digits for the past four years
indicating proper usage and allocation of shareholders’ funds.
Measure 3: Liquidity
As at 3Q
2019, Perak Transit’s net gearing ratio stood at 0.5x with current ratio of
0.9x and cash ratio of 0.3x. For an asset-heavy company, these ratios are
commendable, and are expected to improve as Terminal Kampar Putra nears
completion and becomes fully operational in the next year.
Round 4: Dividends payout
has been consistently paying out dividends every year. In fact, its dividend
per share has increased from approximately RM0.004 per share in FY2015 to
RM0.009 per share in FY2018. This shows us that its assets are profitable and
closing share price of RM0.23 as at 6 December 2019, Perak Transit is trading
at a price of earnings (PE) ratio of 11.12, with an indicative yield of 5.87%. Investors
looking for steady dividend distributions and are excited with Perak Transit’s
expansion plans can watch this Group closely.
An accountant by training, F.I.R.E 2030 is a student of value investing since 2012. She believes that successful investing requires discipline and patience. But with the right knowledge and temperament, ordinary investors can achieve extraordinary results. These articles are her journals on stocks and the investing journey toward financial freedom in 2030.