3QFY22: Positively surprised
Recovery on track; maintain BUY
3QFY22 results positively surprised on lower opex and higher associate contribution, bringing 9M net profit to 78% of our FY22 forecast. Traffic volume have recovered to their pre-pandemic levels; FY23E should thus reflect a full-year of recovery. We raise FY22E net profit by 9% and make slight tweaks to our FY23/24 forecasts (+0.1%/-3%). Our equity DCF-TP is unchanged at MYR4.85 (ke: 8.3%). Maintain BUY.
3QFY22 net profit +73% QoQ, 9M -14% YoY
3Q revenue rose 56% QoQ as the resumption of more economic activities under the NRP P3 (from 1 Oct) and P4 (from 18 Oct) led to traffic volume recovery. As of end-Nov 2021, traffic at the LDP/SPRINT were at 100%/ 95% of their pre-pandemic levels, compared to 77%/54% end-Aug 2021. This, alongside higher associate contribution, more than offset a new provision for Cukai Makmur, leading to a strong 73% QoQ jump in net profit. 9M revenue contracted 3% YoY implying softer traffic volume by a similar percentage, but net profit was down by a larger 14% YoY on lower associate contribution and higher taxes (Cukai Makmur provision).
Traffic recovering; Omicron could be a dampener
Traffic have fully recovered to their pre-pandemic levels in Jan 2022. That said, the resurgence of COVID-19 cases of late, due to the Omicron variant, could have softened traffic volume again as more businesses reimplement the work-from-home arrangement. We retain our +5%/+12% traffic growth assumption for the LDP/SPRINT for FY22E for now. Our financial model has imputed for a full-year of recovery in FY23.
DPS back to pre-FY21 level; div capacity to grow
A 15sen 2nd interim DPS, payable on 30 Mar (ex-date 11 Mar), lifts FY22 DPS to 25sen, similar to its pre-FY21 level (FY21: 20sen). LITRAK’s cash balance should continue to grow, building a case for higher dividend capability as the LDP’s Sukuk is being redeemed, fully by Apr 2023.