RANHILL STUDY NOTES (19 JAN 2021)
1-YEAR GROWTH TARGETS OF 163% & 22% BY 2022 FOR POWER PLANT & WASTEWATER TREATMENT
|
RANHILL's Business |
Capacity as of 19 Jan 21 |
Target capacity by 2022 |
1-year Growth |
|
Power Plant |
380 MW |
1,000 MW |
163% |
|
Malaysia: RANHILL is proposing an extension of the existing concession at our Teluk Salut Power Plant beyond its existing concession end-2029. Also, exploring opportunities in expanding water supply operations to other states in Malaysia. ASEAN: Actively pursuing the development of new gas power plants in the ASEAN region, as well as diversifying into the renewable energy business such as, large scale solar, waste-to-energy and geothermal in tandem with the aspirations of the Malaysian government to increase its generation capacity from renewable energy sources. |
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|
RANHILL's |
Capacity as of 19 Jan 21 |
Target capacity by 2022 |
1-year Growth |
|
Wastewater Treatment |
2,456 MLD water |
3,000 MLD water (2600 MLD local + 400 MLD international) |
22% |
|
Indonesia: Ranhill is also undertaking bidding for the development of “Source-to-Tap” project that aims to extract 10,000 litre per second (lps) sourced from the Jatiluhur dam and supply treated water to 5 regions namely DKI Jakarta, Bekasi City, Bekasi Regency, Karawang Regency and Bogor Regency. Thailand: Management is optimistic in securing more industrial water and wastewater treatment projects with an additional treatment capacity not only from Amata Industrial park but other industrial parks in Thailand. |
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*Remark: MLD stands for million litre per day.
RM4 BILLION TOTAL TENDER SIZE OF WATER TREATMENT PLANT IN 2021
Pengurusan Air Selangor Sdn Bhd (Air Selangor) will call for tenders for the first phase of the Rasau water treatment plant valued at about RM4 billion in 2021.
- Phase 1: 700 MLD water treatment plant
- Phase 2: Additional MLD water treatment plant
Target completion by 2024 to achieve two goals:
- To reduce Air Selangor's non-revenue water (NRW) from 29.7 to 25% by 2025 (Based on track record, RANHILL is competent to achieve this for Air Selangor)
- To increase Air Selangor’s reserve margin from 11% to 15% by 2030
BASED ON TRACK RECORD, RANHILL IS COMPETENT IN ACHIEVING AIR SELANGOR’S TARGET
-
Pengurusan Air Selangor Sdn Bhd (Air Selangor) will call for tenders
for the first phase of the Rasau water treatment plant valued at about
RM4 billion in 2021, with the target to reduce Air Selangor's non-revenue water (NRW) from 29.7 to 25% by 2025. RM4 billion tenders are sizable. Getting the right company to deliver the projects are crucial.
- RANHILL, a reputable NRW company, has been undertaking NRW projects in Johor successfully in a holistic manner since its inception in 2005 and has successfully reduced NRW from over 37% in 2005 to 24.11% as at 31 December 2019.
PEER COMPARISON, RANHILL WINS
Among the public-listed companies with expertise in water treatment plants are RANHILL, TALIWRK, KPS, SALCON and PUNCAK.
In the peer comparison table below, RANHILL stands out as the best water-treatment stock.
|
|
RANHILL |
TALIWRK |
KPS |
SALCON |
PUNCAK |
|
Share Price (As of 18 Jan, 21’s closing) |
RM0.885 |
RM0.81 |
RM0.805 |
RM0.235 |
RM0.37 |
|
ROE |
11.9% |
2.6% |
2.6% |
-0.8% |
-3.4% |
|
DY |
5.6% |
2.5% |
0% |
0% |
-3.4% |
|
PER |
13.5x |
64.7 |
17.2x |
-59.0 |
-3.8 |
|
Price-to-Book |
1.61x |
1.69x |
0.44x |
0.46x |
0.13x |
|
T4Q Earnings Margin |
4.6% |
7.2% |
2.4% |
-2.1% |
-10.3% |
|
Involved in Renewable Energy Business? |
Yes |
No |
No |
No |
No |
|
Current Ratio |
1.8x |
5.7x |
2.5x |
4.1x |
1.3x |
A SOLAR PLAYER IN THE MAKING
Interestingly, RANHILL is also the only water treatment company that is also involved in the growing renewable energy (particularly solar) business. RANHILL has commenced LSS4 preliminary works – holding discussions with landowners, potential EPC contractors and financiers to ensure the most competitive tariff is achieved towards submitting a winning bid. RANHILL is also in discussion with its subsidiaries to install ground-mounted solar PV or rooftop solutions to installed in their facilities. The business will be based on the Nett Energy Metering (NEM) and/or Solar PPA concept, where RANHILL will develop, finance and operate the solar PV plants on a long-term basis.'
Source: Annual Report.
Side Information
As of 19 Jan, 21, pureplay solar stocks are traded at an average PER of 77.1 times (SAMAIDEN 86.5x PER, SLVEST 67.7x PER). Note while RANHILL is striving to grow its solar energy business, it is not a pure-play solar company.
MIDF: RANHILL, RM1.25 (27 November 2020)
On 27 November 2020, MIDF gave RANHILL a target price of RM1.25 – by consider extension of RP1 concession and venture into source-to-tap water supply in Indonesia as key potential catalysts. This target price was provided by RHB Investment Bank before Air Selangor’s RM4 billion tender size announcements in December 2020.
MULTIPLE SHARE BUYBACKS IN JAN 21 (AND PREVIOUS MONTHS) BETWEEN 80 and 95.5 SEN
SUMMARY
- RANHILL, a company with 1-year capacity targets of 163% and 22% are traded at a PER of 13.5 times.
-
RANHILL stands out among its other water treatment players in terms of superior ROE (11.9%), DY (5.6%) and PE (13.5x).
- RANHILL is also the only water treatment company that is also involved in the growing renewable energy (particularly solar) business.
- RANHILL has performed multiple share buybacks in Jan 21, as well as previous months, between 80 and 95.5 sen.
DISCLAIMER: Information is compiled from publicly available sources for study purpose. Stock valuation is beyond scope. There is no BUY/SELL recommendation. Investors own all their investment decisions and investment outcomes.
https://klse.i3investor.com/blogs/jomnterry/2021-01-19-story-h1539413238-RANHILL_1_YEAR_GROWTH_TARGETS_OF_163_22_BY_2022_OVERLOOKED_SOLAR_BUSINE.jsp
