Prolintas Infra Business Trust (PIBT) launched with a target price (TP) of RM1.13, supported by a BUY recommendation. The Trust encompasses four major intra-urban toll highways within the Klang Valley, collectively commanding a 15.7% market share by traffic volume as of 2021. This strategic positioning aligns with the expanding traffic volumes driven by economic growth and urbanisation in the region. PIBT is poised to offer investors both exposure to these growing traffic volumes and the prospect of sustainable, regular distributions.
The financial restructuring of PIBT, finalised with the Government in October 2022, is expected to yield positive outcomes. The restructuring includes planned toll rate increases in 2033 and 2043 for three of its toll highways, while one highway will not see any toll hikes. For FY24E, PIBT is forecasted to achieve a net profit of RM11 million, which will rise to RM12 million in FY25E, rebounding from an estimated headline net loss of RM276 million in FY23E. The trust's structure allows it to distribute dividends from distributable income rather than being constrained by accounting profits. For FY24E, PIBT plans to distribute RM70 million, translating to 6.4 sen per unit, with expectations for growth in future distributions.
The potential for further growth is significant, with the Trustee-Manager, Prolintas Managers Sdn Bhd, open to acquisitions of additional toll highways, both locally and internationally. Prolintas Managers Sdn Bhd, which also operates the Damansara-Shah Alam Elevated Highway (DASH) and the Sungai Besi-Ulu Kelang Elevated Expressway (SUKE), has granted PIBT the right of first refusal for future highway asset acquisitions from its major unitholder, Projek Lintasan Kota Holdings Sdn Bhd (PLKH).
PIBT's equity value is estimated at RM1.24 billion, supporting a TP of RM1.13. The equity value has been determined using the discounted cash flow (DCF) methodology, reflecting PIBT's stable cash flow generation. The future cash flows have been discounted at the consolidated equity cash flow level, post debt servicing, with an estimated cost of equity set at 11.2%. At the current share price of RM0.91, the projected upside of 31% underscores the trust's potential for substantial returns, reinforcing the BUY recommendation.
