SINGAPORE (Nov 14): RHB Research is keeping its “buy” call on water treatment company Moya Holdings Asia with an unchanged target price of 17 cents.
This comes after Moya on Monday reported 3Q revenue surged more than ninefold to $45.8 million following the full accretion of its latest acquisition, Aquatico.
Net profit after tax (NPAT) more than doubled to $5.5 million in 3Q17, despite one-off costs related to acquisitions totalling $0.5 million.
“With over $100 million of cash on its balance sheet, it could likely engage in potential acquisitions in the pipeline in the near term,” says analyst Jarick Seet in a Tuesday report. “It may continue to acquire and consolidate Indonesia’s private water treatment players, which would further boost its explosive growth going forward.”
Already the largest water treatment player in terms of capacity, Moya is looking at the expansion of capacity at two of its existing water plants – Bekasi and Tangerang – by more than 50% to 20,000 litres/s by 2018.
In addition, non-revenue water (NRW) – water that has been produced but is lost before it reaches the customer – remains a key growth driver for the group.
“With only 59% of Aquatico’s water reaching the masses, the remaining 41% of leakages can actually boost Moya’s NPAT substantially,” Seet says. “Management may initiate a plan to cut its NRW by 50% gradually by 2023, which would be very beneficial for Moya.”
As at 12.14pm, shares of Moya are trading 0.1 cent lower at 10 cents, implying an estimated price-to-earnings ratio of 23 times in FY17.
