KUALA LUMPUR: The ongoing investigation on alleged bribery involving Prolintas Group senior management will not directly have a material impact to the operations and financials of its listed trust Prolintas Infrastructure Business Trust, according to Affin Hwang Capital.
This is given that the investigation by the Malaysian Anti-Corruption Commission (MACC) relates to Damansara-shah Alam Elevated Expressway (DASH) and Sungei Besi-Ulu Kelang Expressway (SUKE) which are not part of Prolintas Infra, Affin Hwang added.
The firm, however, said while its day-to-day operations may be unaffected, the incident raises doubts over Prolintas Infra's integrity.
"Post the analyst briefing, we also gathered that all operations and maintenance functions between the highways are separated.
"A silver lining can be found
in the fact that all concession requirements had been adhered to, with the investigation only focused on the standalone construction projects.
"We deem business will go on as
usual with the new interim executive management team at the helm, and Prolintas Infra will provide full cooperation to the MACC.," Affin Hwang explained.
Given the integrity concern, the firm downgraded Prolintas Infra to "Hold" with a lower target price of 90 sen.
"We find it prudent to incorporate an additional 150 basis points to our equity
risk premium assumption to address concerns that investors may face in relation to corporate governance."
Affin Hwang added that its dividend yields of 7.3-7.5 per cent over financial years 2024-2026 should provide support to Prolintas Infra's share price.
The events unfurled on Tuesday evening when several media outlets reported that
some members of the senior management team of a highway concessionaire had been remanded by the MACC.
Prolintas Group subsequently confirmed that its personnel were involved with a statement to the press around midnight on the same day.
"We understand that the investigation began on Monday, and relates to two construction contracts worth RM1.67 billion in total for SUKE and DASH," Affin Hwang noted.
"The individuals concerned are now on a leave of absence, with an interim executive management team in place to run the day-to-day operations of Prolintas Infra," it added.
Prolintas Infra was the first listed business trust in Malaysia that is Shariah-compliant.
It has four income-generating highway assets namely Ampang-Kuala Lumpur Elevated Highway, Guthrie Corridor Expressway, Lebuhraya Kemuning-Shah Alam and Sistem Lingkaran Lebuhraya Kajang under its portfolio.
The trust was listed on March 25 this year.