KUALA LUMPUR: TA Securities has assigned a fair value of RM1.06 per unit for Prolintas Infra Business Trust (Prolintas Infra BT), an almost 12 per cent premium to its initial public offering (IPO) price ahead of its listing on Marc 25, 2024.
This valuation is based on a target yield of six percent for the financial year ending Dec 31, 2025 (FY25), with a distribution per unit (DPU) of 6.38 sen, the research firm said in a note.
The business trust's IPO is priced at RM0.95.
Prolintas Infra BT is priced at a FY24 forecast distribution yield of 6.7 per cent.
Prolintas Infra BT will be the first listed business trust in Malaysia that is Shariah-compliant and has four income-generating highway assets, namely Ampang – Kuala Lumpur Elevated Highway (AKLEH), Guthrie Corridor Expressway (GCE), Lebuhraya Kemuning - Shah Alam (LKSA), and Sistem Lingkaran-Lebuhraya Kajang (SILK) under its portfolio. The company is scheduled to be listed on March 25 this year.
The listing of Prolintas Infra BT entails the offering of up to 468.7 million units, comprising a retail offering of up to 45.75 million units and an institutional offering of up to 422.95 million units.
"We believe our target yield of six per cent is reasonable, given the trust group's consistent revenue streams from long-term concessions, coupled with high barriers to entry and limited competition. "Additionally, the trust group presents promising growth opportunities and holds a Shariah-compliant status. "Comparatively, listed Shariah real estate investment trusts (REITs) currently offer FY25 distribution yields ranging from 4.6 per cent to 6.2 per cent," it noted. TA Securities does not have a rating for Prolintas Infra BT.
Meanwhile, TA Securities said Prolintas Infra BT has provided its net profit forecast for FY24, with net profit and distributable income amounted to RM8.3 million and RM68.7 million respectively. It has projected Prolintas Infra BT's distributable income to increase by 2.1 per cent and 3.7 per cent in the corresponding years.
This is drawing on the traffic consultant's report, which forecasts a 3.3 per cent and 3.5 per cent growth in traffic volume for FY25 and FY26, respectively. Meanwhile, TA Securities noted that the company's trustee-manager will distribute a total distribution of RM70.0 million or 6.36 sen per unit, scheduled to be paid out in two tranches during FY24 and FY25.
For FY25 and FY26, it expects Prolintas Infra BT to pay out 6.38 sen per unit and 6.61 sen per unit, respectively, based on its payout ratio assumptions of 100 per cent.
It said based on the IPO price of RM0.95, this translates to DPU yield of 6.7 per cent to 7.0 per cent. In FY23, Prolintas Infra BT reported a loss after tax (LAT) of RM281.6 million, a significant increase from the RM13.6 million LAT in FY22.
This rise in LAT was due to a 19.5 per cent reduction in revenue, falling from RM384.2 million to RM309.4 million.
The decline in revenue resulted from reduced toll rates and the absence of toll compensation revenue following the implementation of the supplemental concession agreements (SCAs) 2022.
The business trust has eight cornerstone investors,namely Permodalan Nasional Bhd, AHAM Asset Management Bhd, AIIMAN Asset Management Sdn Bhd, Lembaga Tabung Haji, Maybank Asset Management Sdn Bhd, Maybank Islamic Asset Management Sdn Bhd, Kenanga Investors Berhad, and Kenanga Islamic Investors Bhd.