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PBA - Unsung Hero: This Undervalued Water Utility is Poised to Make Waves (New Intrinsic Value is RM3.60) - KingKKK

KingKKK
Publish date: Thu, 18 Jan 2024, 07:22 AM


New Intrinsic Value = RM3.60


1. My new Intrinsic Value for PBA is RM3.60 after the news of new tariff yesterday. The news article is as below.

Penang's water tariff still among the lowest [Updated] (nst.com.my)

52% of Penang users will only pay RM6.20 per month | The Star


My 2024 EPS estimate is increased to RM120 million


2. This is after increasing domestic water tariff assumption.


RM million
FY2021
FY2022
FY2023F
FY2024F
FY2025F
Revenue
342.10
347.99
431.33
511.53
541.49
PBT
35.40
33.00
81.57
157.76
168.73
Net Profit
44.03
77.12
61.99
119.90
128.23
EPS
0.1330
0.2330
0.1873
0.3622
0.3874
How do I get Intrinsic Value of RM3.60? 10 * 36.22 = 3.62 

3. Based on the RM120 million net profit, I get my EPS of 36.22 sen for 2024. Using 10x PE I get RM3.62 as my new Intrinsic Value.

Valuation

PE
10
EPS 2024
0.3622
Intrinsic Value
3.62


10x PE is OK because it is below TENAGA, YTLPOWER and RANHILL. It is also about 20%-25% below RANHILL PE.

PE

YTLP
11x
TENAGA
20x
RANHILL
14x


Background of PBA:

PBA was established in May 2000 as a holding company. It is listed on the Main Board of Bursa Malaysia in April 2002. The company was originally formed to manage the water supply needs of Penang, Malaysia. It has since expanded its operations to include water treatment, training, and renewable energy. Overall, PBA Holdings Berhad has established itself as a leading water supplier in Malaysia with a strong commitment to serving the community and protecting the environment.


Some useful charts, source gurufocus:

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