In my previous blog, I’ve posted why Ranhill Utilities Berhad (“Ranhill” or “the Group) acquired the two companies and diversified into engineering sector. I’ve got some questions asking who they are and what are their main businesses. Let’s dive into who’s Ranhill…. Will give a brief background about their businesses…

Ranhill operates within the Environment, Energy sectors and Engineering sectors.

In my previous blog post, I’ve posted on the new acquisitions and engineering sector, feel free to click the link below to check it out.

https://klse.i3investor.com/blogs/Ranhill1/2021-07-30-story-h1568873655-Ranhill_is_underrated.jsp

Today, I will focus more on their environment and energy sectors.

ENVIRONMENT SECTOR

For the environment sector, Ranhill provides:

1. Water supply services in Johor State
2. Water, wastewater and reclaimed water treatment plants in China and Thailand
3. Management and optimization of water companies assets - Specialized in Non revenue water reduction programme in Johor State

Water Supply Services in Johor State

• RanhillSAJ is responsible for raw water abstraction, treatment, distribution and sale in Johor with 99.8% water supply coverage.
• In short, RanhillSAJ will extract from the extraction of raw water from multiple sources (for example, rivers and reservoirs) and to treatment to potable (drinkable) water to our household
• Exclusive license to provide source to tap water supply services throughout the State of Johor
• Johor is the third most populous state with a population of approximately 3.8 million local residents
• Managing 23,341 kilometers of pipes
• 44 Water treatment plants (WTP)
• Total treatment capacity of 2,026 Million Litres Per Day (“MLD”)
• One of the main revenue incomes

Water, wastewater and reclaimed water treatment plants

Ranhill Water Technologies Sdn Bhd (“RWT”) undertakes varied water, wastewater and reclaimed water utility projects in Malaysia, Thailand and China. This includes operating treatment plants for the same.

Malaysia

• Designed and built sewerage treatment plant at STP4 at Forest City, Johor with a total treatment capacity of 11MLD

China

• Concession agreement with local authorities or industrial park management councils via 40%:60% joint venture arrangement with SIIC Environment Holdings Ltd (local starategic partner)
• 12 Wastewater treatment plants ranging from 25-30 years
• Total treatment design capacity of 227 MLD

Thailand

• 10 Water and wastewater treatment plant and reclamation water treatment plant, total treatment design capacity of 114 MLD
• 10 Wastewater treatment plants ranging from 8-25 years

Management and optimization of water companies assets - Specialized in Non revenue water (NRW) reduction programme in Johor State

• Ranhill Water Services Sdn Bhd (“RWS”) is one of the largest NRW Management specialists in the region
• What is NRW? It refers to the water that has been produced or treated but is lost before it reaches the end user.
• The company leverages on its in-house, cloud-based NRW Management software platform called AquaSMART.
• AquaSMART assists water operators in the quest for optimum NRW reduction.
• It has obtained patent and copyright approval within Malaysia.
• RWS continues to improve on its track record for NRW savings.
• In FY2020, RWS has saved more than 64 MLD of treated water in Johor.

Together, the three subsidiaries enable the Group to deliver a complete solution for the water industry and firmly positions Ranhill as an established leader with diverse capabilities.

ENERGY SECTOR

• Ranhill Powertron Sdn Bhd (“RPI”) and Ranhill Powertron II Sdn Bhd (“RPII”), operate and maintain two Combined Cycle Gas Turbine (CCGT) power plants located in the Kota Kinabalu Industrial Park.
• RPI operates the 190 Megawatts (MW) Teluk Salut Power Station while RPII operates the 190 MW Rugading Power Station.
• The Group’s power plants deliver up to 380 MW of energy, which is equivalent to approximately 40% of the total installed capacity of Independent Power Producers (“IPP”) in Sabah state.
• This makes Ranhill the largest IPP player in Sabah.

• The Group derives revenue from the sale of electricity generated to Sabah Electricity Sdn Bhd as per the terms contracted under the Power Purchase Agreements (“PPA”).
• The RPI has a PPA for 21 years until 2029, while RPII’s 21-year PPA is until 2032.
• Also a dominant player in renewable energy:
  • The Group also received a Letter of Notification from the EC for their successful bidding for the 50 MW LSS PV Plant in Batang Padang, Perak in March 2021.
  • On 19 August 21, Ranhill signed a Large-Scale Solar 4 @ Mentari (LSS4@Mentari) Photovoltaic Power Purchase Agreement (PPA) with Tenaga Nasional Berhad (TNB) for the construction and operation of a 50MWa.c. Solar Photovoltaic Energy Generating Facility at Batang Padang, Perak.

Strategic Objectives

Below is the strategic objective for environment and energy sector :

ENVIRONMENT SECTOR

• 3,000 MLD water and wastewater treatment capacity by 2022 from 2,367 MLD in 2020 (27% growth)
• With a target of 400 MLD from international operations by 2022, from 341 MLD in 2020 (17% growth)
• The Group has set a target of further reduction of Johor’s NRW levels to 7.5% in the long-term. NRW in Johor is the lowest in the country, with a NRW level of 26.7% in FY 2020.

ENERGY SECTOR

• Gross 1,000 MW gas fired power plants that deliver energy by 2022 from 380MW in 2020 (163% growth)
• 300 MW of Solar PV energy by 2024
• Development of new CCGT power plants in the ASEAN region
• Ongoing diversification into RE sources, such as large scale solar, hydro, geothermal and waste-to-energy (WTE)

Prospects and outlook for Environmental Sector

Water supply services

• Continue to increase its production capacity towards ensuring sufficient supply of water across Johor, particularly in southern parts of Johor, where reserve margins are low and water demand is high.
• Water and wastewater treatment capacity is expected to growth by 27% by 2022.
• Continue to actively engage SPAN and the Water Asset Management Company (Pengurusan Aset Air Berhad or “PAAB”) in constructing new WTPs as well as upgrading existing WTPs.
• Works on the 160 MLD Layang 2 WTP of RM250 million are expected to be completed by FY2023

Water, wastewater and reclaimed water treatment plants

• Offer its expertise to other industrial parks and industries especially in Malaysia and South East Asia.
• In Thailand, RWT aims to convert its existing Operations & Maintenance contracts to longer-term Rehabilitate-Own-Transfer concessions.
• The Group has previously attempted to expand its regional footprint into Myanmar and Indonesia and will continue to target industrial parks in these countries.

NRW

• In Johor, RanhillSAJ will continue to expedite pipe rehabilitation and replacement works towards the realisation of its set NRW target level of 26.3% for FY2021.
• Further reduction in NRW will be achieved via active leakage control activities that have been proposed under Rehab 2020 and Rehab 2021 programmes respectively(refer to the table below)

• The proposed pipe rehabilitation programmes will help to achieve the 2023 Operating Period 5 NRW target level of 22%.

Prospects and outlook for Energy Sector

• Ranhill’s Energy Division looks forward to the expected completion of the Sabah East-West Transmission line in 2023.
• The transmission line will enable up to 400 MW of additional electricity to be dispatched from Sabah’s West Coast to the East Coast.
• With this, both RPI and RPII can export power generated by the Teluk Salut and Rugading power plants to Sabah’s east coast.
• The signing PPA with TNB to be the developer and operator for the Solar Photovoltaic Energy Generating Facility under the Government’s LSS4@Mentari initiative for 21 years will have recurring income until 2042
• This will contribute positively to the projected earnings and bottom line
• Renewable Energy (RE)

• Prospect’s from the Malaysian government’s revised the national Renewable Energy (RE) capacity mix target from 20% to 31% by 2025
  • Ranhill also aims to participate in the coming LSS 5 bidding exercise after its successful participation in LSS3 and LSS4

My view

I estimate that the revenue and profitability will be better than last year. But for

now, the environment segment still contributes majorly to their revenue in both FYE 2019 and FYE2020. With the new acquisitions, let’s see how the next financial result will be… might look into the financials of Ranhill in the next article..or perhaps you could leave in the comment what would like to know about Ranhill…