Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily, on September 15, 2016.


 

KUALA LUMPUR: Perak Transit Bhd wants to replicate its success in setting up Ipoh’s integrated bus terminal, known as Terminal Amanjaya, by developing similar projects elsewhere in the state, starting with Kampar.

The Perak-based petrol station, stage bus and terminal operator said the soon-to-be-listed company will focus on growing its terminal business.

Managing director Datuk Seri Cheong Kong Fitt said the company chose to develop its next integrated terminal in Kampar because it had become a “booming town” after Universiti Tunku Abdul Rahman set up its main campus there.

“Being a university town, student movement will be high, so we believe that terminal buses would serve them well,” he told The Edge Financial Daily.

Unlike most other stage bus or express bus operators in Malaysia, Cheong said Perak Transit’s business model had always been to leverage the synergistic competitive advantage from the terminal it operates.

“If you look at our segmental revenue analysis, terminal gives us a big portion of revenue and income. As a terminal operator, we offer not only bus transit services, but also lifestyle, petrol stations, advertising and promotional services,” he explained.

Perak Transit, an ACE Market candidate that is launching its prospectus today, also operates four petrol stations in Ipoh, Lahat and Kuala Kangsar.

Currently, Cheong said Terminal Amanjaya had achieved a 94% occupancy rate, and some of the tenants had expressed their intention to set up branches in Perak Transit’s Kampar Terminal.

“We have allocated RM4 million as marketing expenses to attract not only our existing tenants at Amanjaya, but also businesses in Kampar itself and perhaps governmental departments,” he said.

For the financial year ended Dec 31, 2014 (FY14), petrol station operations contributed 46.31% of Perak Transit’s total revenue of RM77.58 million, followed by its terminal business (32.22%) and bus operations (21.47%).

Cheong believes that prospects for the terminal business could be the main driver of Perak Transit going forward, particularly in the advertising and promotional (A&P) segment.

“Our margin in A&P went as high as 99.96% for FY14. We own the terminal, so we do not need to incur high cost in renting out A&P space. So we want to bring this model to Kampar as well,” he said.

In Kampar, Perak Transit would own both the 3.72-acre (1.5ha) land and the new terminal building.

Cheong said the A&P division currently relies on two agents to source advertisement and events from external parties, and in order to mitigate the risk of overdependence, the group had begun to cultivate talents to handle this task in the event of any termination of collaboration with these agents.

“We have not started building it yet; we need to get local government approval first. As of now, we are waiting for the approval of the building plan,” he said, adding that the construction period for this new terminal would span 18 months.

Perak Transit’s initial public offering involves the issuance of 245 million new shares, of which 58 million shares will be offered to the public, while 187 million will be placed to selected investors.

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