KUALA LUMPUR (Jan 18): AmInvestment Bank Bhd has initiated coverage on Perak Transit Bhd at 83 sen with a Buy recommendation and fair value (FV) of RM1.25.

In  a note today, the research house said it sees many similarities between this operator of modern public transport terminals and an airport operator.

“We value Perak Transit at RM1.25 based on 15x its FY22F EPS, at a 30% discount to our FY22F target PE of 22x for Malaysia Airports Holdings Bhd.

“We like Perak Transit for its unique business model, i.e. the operation of modern public transport terminals, also known as integrated public transport terminals (IPTTs) that emulate airports with spacious and brightly lit shopping, dining and waiting areas, and clean public facilities.

“This entices visitors and commuters to spend more money and time in the terminal. This captive traffic is monetized in the form of rental incomes from commercial units and advertising space within the terminal,” it said.

AmInvestment said Perak Transit has proven the commercial viability of this business model in its Terminal Meru Raya in Ipoh (an interstate transportation hub) and the newly opened Terminal Kampar Putra Sentral in Kampar.

It said Kampar Putra Sentral is supported by a high and fast-growing student population in the campus town.

“This student population has high propensity for travel during school breaks and festivities, as well as during weekends for leisure; and

“The vast opportunities for Perak Transit to replicate this successful business model. Already, it has at least three more projects in the pipeline, namely, in Bidor, Tronoh and Kuantan,” it said.