Prolintas eyeing tolled highway acquisitions domestically and overseas

PETALING JAYA: Prolintas Infra Business Trust (PIBT) is not ruling out future tolled highway acquisitions both domestically and abroad.

The focus will also be on organic growth of the existing highways through increased value-added services and a focus on cost efficiencies.

The trustee manager will look to optimise PIBT’s capital structure and cost of capital, said Maybank Investment Bank (IB) Research. It is forecast to report a net profit of RM11mil in the current financial year (FY24) and RM12mil in FY25 and RM13mil in FY26, after a headline net loss of RM276mil in FY23.

The earnings are on assumptions of a 3.6% per annum traffic growth in FY24-FY26 (FY23: 5.8%), it said.

Based on its estimates, PIBT will remain in net debt in FY24-26.

It forecasts a net gearing of 3.3 times at end-FY24 (2.9 times end-FY23), rising to 4.5 times end-FY26 as it draws down on tawarruq financing two for committed capital expenditure of about RM420mil.

The manager also intended to distribute at least 90% of PIBT’s distributable income on a semi-annual basis.

For FY24, the intention is to distribute RM70mil or 6.4 sen a unit. It expects distribution to grow over time.

Maybank IB Research initiated coverage on the group with a “buy’’ recommendation and a target price of RM1.13 a share.

PIBT is an Islamic business trust that has four major intra-urban toll highway assets in its portfolio, with a combined market share of 15.7% (by traffic volume) in the Klang Valley in 2021.

It offers exposure to expanding traffic volume amid rising economic activities and urbanisation. It also offers sustainable and regular distribution to unitholders.

The major unitholder, Projek Lintasan Kota Holdings Sdn Bhd (PLKH), manages and operates the Damansara-Shah Alam Elevated Highway and Sungai Besi-Ulu Kelang Elevated Expressway, which commenced operations in October 2022 and September 2022 respectively.

PIBT has the right of first refusal over future acquisition of highway assets from PLKH.

Maybank IB Research estimates PIBT’s equity value to be RM1.24bil.

PIBT’s business model derives fairly predictable cash flows. It favours the discounted cash flow methodology to derive its equity value. It discounts PIBT’s future cash flows at the consolidated equity cash flow level (after debt servicing/repayment), using an established cost of equity of 11.2%.

The risk factors include potential financial liability arising from non-compliance issues, early termination of the concessions, downward revisions to toll rates as well as fluctuations in interest rates.