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(Icon) PBA (1) - Water Tariff Hike Resulted in 136% Earnings Growth

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Publish date: Thu, 17 Sep 2015, 07:06 PM
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I follow the smell of money.

 

 

 

 

1. Introduction

 

PBA is licensed by the government to supply water to Penang.

 

On 19 March 2015, PBA announced that Penang will implement water tariff hike effective 1 April 2015. The announcement caused share price to spike to a height of RM1.47.

 

However, over the subequent few months, this piece of news was forgotten and share price gradually retraced to around RM1.00.

 

On 28 August 2015, PBA announced its financial result for the quarter ended 30 June 2015. Net profit increased by a whopping 136% to RM14.8 mil per quarter (compared to average net profit per quarter of RM6.4 mil in FYE 31 December 2014).

 

In normal time, this piece of information would have triggered a feeding frenzy. However, in the past few weeks, most investors were busy fending off the bear. As a result, nobody really pay attention to this company.

 

 

 

2. Basic Financial Information

 

The Company has 331 mil shares outstanding. Based on market price of RM1.02, market cap is RM338 mil.

 

The group is in net cash position. It has loans of RM18.4m, cash of RM35.8 mil and net assets of RM744 mil. Net asset per share is RM2.25.

 

The group reported net profit of RM24.8 mil in FY2014. Based on market cap of RM338 mil, historical PER is 13.6 times.

 

Annual Result:

F.Y. Revenue ('000) Profit Attb. to SH ('000) EPS (Cent) PE DPS (Cent) DY NAPS
TTM 268,009 24,548 7.41 13.77 3.75 3.68 2.2500
2014-12-31 261,017 24,759 7.48 17.25 3.75 2.91 2.2000
2013-12-31 251,731 27,930 8.44 11.73 3.75 3.79 2.1600
2012-12-31 244,560 29,035 8.76 10.39 3.75 4.12 2.1100

 

However, based on annualised net profit of RM59.2 mil (being RM14.8 mil x 4), prospective PER will be 5.7 times. 


 

 

3. Dividend

 

Over the past three years, PBA paid out DPS of 3.75 sen. Based on average EPS of 8.2 sen, payout ratio is 45%.

 

Based on same payout ratio and prospective EPS of 17.9 sen (being RM14.8 mil x 4 / 331 mil shares), will the company declare DPS as high as 8 sen, translating into dividend yield of closed to 8% ?

 

Only time can tell.

 

 

 

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4 people like this. Showing 11 of 11 comments

Up_down

Buy buy buy unless serious drought happened and PBA doesn't has water supplying to residents.

2015-09-17 19:24

Up_down

Must know how to pick a good one. Share price came down from peak 1.65. It's very reasonable to buy water utilities stock at current price given bright future prospects.

2015-09-17 19:54

Up_down

Icon. You better go to check whether its water level in the dam is sufficient to supply or not cause heavy haze may encourage water consumption.

2015-09-17 20:01

apprentice

Good tip Icon. Thank You.

2015-09-17 20:14

goreng_goreng

thanks Icon, possible high dividen, can put into watchlist.

2015-09-18 08:53

bugle

You wrote, and with that, hopefully it will go up some. You think it will go up and should go up some more, I also think it should go up some more, but someone out there think it's still not the time yet. So the question: when? Who to drive? You or the one who said it's still not the time yet? Me? I tried just now, but I'm just a small potato. Anyway, I still believe that it should go up some more, just a matter of time. Good luck!

2015-09-18 10:29

Icon8888

never mind, we patient a bit

2015-09-18 10:46

paperplane2

dunno apa logic to buy this?

2015-09-18 12:35

paperplane2

Sailang woh

2015-10-18 17:02

buddyinvest

icon sifu, are you still holding pba? Looks like coming QE this week will be very good.

2016-02-17 05:36

Icon8888

Sifu buddy of course I still holding

2016-02-17 07:48

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