• Incorporated in 2014 to undertake the reverse take-over of Symphony House, Ranhill Holdings Bhd (Ranhill) has significant interest in power and environment businesses. In the power segment, Ranhill controls 37.4% of the total IPP capacity in Sabah, while in the environment business, Ranhill was granted an exclusive license from the Minister of Energy, Green Technology and Water for the provision of source-to-tap water supply services to the entire state of Johor since March 2000, giving the group a market share of 10.6% in terms of the design capacity of water treatment plants in Malaysia.
• Ranhill’s water-related operations are mainly in Malaysia, while its international operations are in China and Thailand. In China, the group has 15 water and wastewater concessions on a ‘Build, Transfer, and Operate’ (BTO) and ‘Take-over Operating Transfer’ (TOT) basis, with an aggregate treatment capacity of 362.0 MLD. Through its joint-venture with Yichun Pinang, Ranhill also operates a potable water treatment plant in China with a treatment capacity of 50.0 MLD.
• Going forward, the group plans to continue leveraging on its expertise in the power sector to secure more power generation assets through unsolicited bids in Asia by acquiring power plants with generating capacities not exceeding 1,000 MW. Ranhill will also capitalise on government initiatives for NRW reduction by expanding its NRW programme via its in-house developed AquaSMART, in addition to increasing the water treatment capacity in China by up to 1,000 MLD.
• At an indicative offer price of RM1.20 per share, the company’s listing PER is at 20.3x on its 2015 earnings, which is within the industry PER of 21.6x; therefore the share price is already fair, in our view. However, we think that the company’s share price will continue to be backed by; i) Ranhill’s considerable domestic market share in the power and water segment, ii) potential revenue contribution from the new water plants in China that slated for completion in 2016-to-2017, and iii) growing demand for water treatment services in China and Thailand.
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Company Background

• Ranhill Bhd Group (RB Group) was initially listed on the Main Board of Kuala Lumpur Stock Exchange (now known as Main Market of Bursa Securities) on 15th February, 2001. Following a voluntary take-over offer for 597.3 mln shares at a cash offer price of RM0.90 per share by the group’s major shareholders, RB Group was subsequently delisted on 14th November 2011 due to subdued performance of its construction business.
• In 2013, RB Group undertook an internal group reorganisation exercise which resulted in the establishment of Ranhill Energy and Resources Sdn Bhd Group (RERB Group). RERB Group was initially targeted for an initial public offering and listing on the Main Board, but the plan was subsequently withdrawn due to the suspension of the license issued by Petronas to undertake downstream oil and gas activities. The suspension hindered RERB’s ability to undertake jobs issued by Petronas and resulted in a major loss of revenue to the group.
• To facilitate its re-listing, Ranhill was incorporated on 28th April, 2014 to undertake a reverse take-over of Symphony House, forming the Ranhill Group (Ranhill Holdings Bhd and its subsidiaries). Ranhill comprises of all the water and power business of the then RERB Group, in addition to the option to acquire a stake in the oil and gas company, Ranhill WorleyParsons Sdn Bhd (RWorley), from RERB via a Call Option.
• Ranhill’s power business is mainly conducted through Ranhill Powertron Sdn Bhd (RPI), Ranhill Powertron II Sdn Bhd (RPII), Ranhill Power O&M Sdn Bhd (RPOM), Ranhill Power O&M Sdn Bhd II (RPOMII) and Ranhill Power Services Sdn Bhd (RPS).
• Today, the group owns and operates two 190 MW CCGT power plants in Sabah, Malaysia on a Build, Operate and Own (BOO) and Build, Operate and Transfer (BOT) basis. Its subsidiaries, RPI and RPII had secured a contract for the sale of up to 380 MW of electricity for a 21-year term to Sabah Electricity, commencing 25th October 2008 and 22th April 2011 respectively.
• In its environment business, Ranhill provides water supply services, operate water and wastewater treatment plants and specialised services in the management as well as optimisation of water utility assets. Their operation is conducted via SAJ Holdings Sdn Bhd (SAJH), Ranhill Water Services Sdn Bhd (RWSB) and Ranhill Water Technologies (Cayman) Ltd (RWT Cayman).
• The group has 15 water and wastewater concessions either on a BOT, BTO and TOT basis in its water treatment and wastewater treatment plants, with an aggregate treatment capacity of 362.0 MLD. Through its joint-venture with Yichun Pinang, Ranhill also operates a potable water treatment plant in China with a treatment capacity of 50.0 MLD.
• The group’s business is located mainly in Malaysia and Asian markets such as China and Thailand. In Malaysia, Ranhill was granted an exclusive license (renewable every three years) by the Minister of Energy, Green Technology and Water for the provision of source-to-tap water supply services to end-customers in Johor since March 2000. 

Source: M+ Online Research - 16 Mar 2016