PBA Holdings Bhd is likely to continue its upside movement having close above the RM1.73 resistance level. PBA’s share price movement has been impressive, surging 122.9% to close at RM1.85 on Aug 19. The counter touched a 52-week high of RM2.62 in January from a low of 78 sen last November.
PBA is a licensed water-supply operator that serves Penang and it manages the water resources very well. It is a dividend yielding stock with a consistent dividend yield of 3% to 4% per year.
PBA's earnings are expected to come in strong once the water tariffs are revised. This would translate into higher earnings and enable the company to pay out higher dividends. In addition, PBA is seen as an ESG stock, thus, will likely attract a lot more fund flows from investors who are interested in putting their money into ESG stocks.
Higher tariff rates for non-domestic users in Penang were implemented on 1 Jan 2023. This along with lower energy costs contributed to PBA achieving its best-ever quarterly pre-tax profit of RM29.1 million in 3Q23.
Given its monopoly status and its position in a non-cyclical sector with inelastic demand, a higher P/E ratio of 7-8x seems fair. If PBA is valued at 7-8x P/E, its potential worth could range from RM1.05 billion to RM1.2 billion, translating to a per-share value of RM3.17 to RM3.63.
New domestic water rates came into effect in Penang with effect from Feb 1 in compliance with the new Federal Government Regulations. PBA said the rise in water tariff rates will put it in a better position to finance urgently needed water projects to meet Penang’s increasing water demand.
Its group chief executive officer (CEO) K Pathmanathan said the new rate of 0.86 sen per cubic metre (m3) for up to 35 m3 of monthly usage is positive for the company’s revenue, and will help raise funding to implement major water supply engineering projects.
Meanwhile, group chief financial officer Dr Mary Ann Harris said while its business prospects are intact post new rates, revenue will likely moderate due to non-billing for the first 10,000 litres for domestic consumers.
A single-tier final dividend of 1.75 sen per share was declared. The entitlement date is July 15, with a projected total payout of RM5.79 million by July 26, 2024. Surely, higher payout and and stronger earnings are key to keep investors interested in this gem.
Created by zaclim | Sep 12, 2024
Manufacturer of semiconductor components, D&O Green Technologies Bhd is experiencing a positive momentum after trading at a low of RM1.98. Can the uptrend sustain?
Created by zaclim | Sep 11, 2024
CCK Consolidated Bhd was the standout performer among its poultry peers, rising some 122% over the past year. Having seen a great run, can it sustain the upward trend?
Created by zaclim | Sep 04, 2024
Maybulk Bhd reported higher net loss in 2QFY24 but signs point to positive share price momentum in the near term. Is it time to start buying?
Created by zaclim | Sep 02, 2024
Ecomate Holdings Bhd managed to touch its year high of 90 sen recently, a level last seen in May. Could this signal to a continued surge upwards?
Created by zaclim | Sep 02, 2024
Hup Seng Industries Bhd has done well to touch a year high of RM1.33 in July but lost some ground subsequently. However, the counter appears to be continuing its uptrend recently. Can it sustain?
Created by zaclim | Aug 29, 2024
AirAsia X Bhd is still not out of the woods but is seeing a rebound after its share price rose to a high of RM1.35 recently. Can it continue to fly higher?
Created by zaclim | Aug 28, 2024
Cuscapi Bhd has gained 50% in terms of value year-to-date and signs indicate that the good run still has legs.
Created by zaclim | Aug 27, 2024
After a turnaround in its financials, Pesona Metro Holdings Bhd has been attracting investors’ interest especially after bagging 4 contracts in a year. Will its good run in share price be sustainable?
Created by zaclim | Aug 26, 2024
Able Global Bhd has been surging in recent weeks although still shy of its 52-week high seen in June. Will the counter be able to reach its high?
Created by zaclim | Aug 26, 2024
Johor Plantations Group Bhd may not have performed as well as other listings this year but signs indicate the counter might trend higher