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PTRANS-WA: Strong Growth in Earnings Accompanied by Bonus Shares and Warrants

The company warrant (PTRANS-WA) of Perak Transit Berhad (PTrans) began trading in Bursa Malaysia on 28 September 2017.  The warrant fluctuated between 10 to 14 sen after listing and ended trading on 4 October 2017 at 12 sen.  The mother share closed at 28 sen on the same day.  PTrans was listed a year ago at an IPO price of 15 sen per share.  The share price has now almost doubled from a year ago when it started trading.  Compared to the bigger IPOs on Bursa Malaysia this year which disappointed subscribers somewhat, PTrans brought cheers to those who put in money in the company IPO a year ago especially now the company has just rewarded shareholders with bonus shares and warrants.

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The company owns and operates the Amanjaya Terminal in Ipoh. The integrated terminal has been in operations since 2012. PTrans rents out shop spaces as well as advertising and promotional spaces. Its three main businesses are integrated public transportation terminal, bus operations and petrol stations. 

In the first half of 2017, PTrans recorded 45% growth in revenue from RM37.93 million first half last year to RM55.03 million.  Net profit grew at a faster pace of 83% from RM7.16 million to RM13.80 million.  PTrans explained in the notes accompanying its financial results that it mainly derives revenue from rentals of space and facilities from public transportation terminal, providing public stage bus and express bus services, and petrol stations operations and the management of Automotive Diesel Oil (ADO) incentive program.  All three segments mentioned above experienced increase in revenue and with project facilitation fees within its terminal operations contributing substantial portion of the growth.

PTrans intends to develop integrated public transportation terminal in other parts of Perak and other regions in Malaysia.  It has commenced the construction of Terminal Kampar, a lifestyle centric bus terminal, which is expected to be completed by 4th quarter of 2018.  Terminal Kampar will have a net lettable area (NLA) of 400,000 sq ft, which is almost eight times the NLA of 49,000 sq ft at Amanjaya. The new terminal consists of cinema, leisure bowling alleys and budget hotel. In addition to Terminal Kampar, the Group’s plans include similar integrated public transportation terminal in Bidor and Tronoh.  The board of directors of PTrans expect favourable financial performance for the financial year ending 31 December 2017.

PTrans has recently completed a 1 for 10 bonus issue of shares and 1 for 2 bonus issue of warrants which led to the birth of PTRANS-WA.  A total of 114.29 million new shares and 571.47million warrants were issued pursuant to the above corporate exercises.  At the current price levels, PTARNS-WA is trading at a relatively far premium of 26.8%.  Nevertheless, its three years’ tenure may not be too much to the liking of some investors although the company is expected to record significant growth if it successfully implements its strategies moving forward.  PTRANS-WA may be attractive for some traders due to its gearing of more than 2.3 times.  However, after adjusting for delta, the effective gearing for PTRANS-WA is lower at 1.81x.  Therefore, traders buying into PTRANS-WA can expect the warrant to outperform the mother share by 81% should the mother share price rises in the short term. 


PTRANS-WA

Warrant Price

:

0.120

Share Price

:

0,280

Exercise Price

:

0.235

Warrants Expiry Date

:

19/9/2020

Premium

:

26.8%

Gearing

:

2.33x

Underlying Historical Volatility

 

62.8%

Warrant’s Implied Volatility

:

50.1%

Delta

:

0.77

Effective Gearing

:

1.81x

4/ 10 /2017

Alan Voon

 

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Analysis

Warrant Ranking by Premium (7 Aug 2016)

Warrant Ranking 7 Aug 2016 by Premium

 

 

 

 

 

 

 

 

 

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