INTRO ABOUT SALCON : 

Through the years, the Group has evolved into a leading water and wastewater engineering company, with focus on the investment, design, construction, commissioning, operation and maintenance of water and wastewater treatment plants and ancillary facilities across Asia. In 2003, Salcon was listed on the Main Board of Bursa Malaysia Securities Berhad (formerly known as Kuala Lumpur Stock Exchange Bursa Malaysia Securities Berhad).

Over the past 40 years, Salcon has built an excellent trackrecord in water and wastewater solutions. To date, the Group has completed more than 900 water and wastewater projects in Malaysia, Thailand, Sri Lanka,Vietnam and China. In 2014, Salcon secured the largest water contract in the Group’s corporate history, namely Langat 2 Water Treatment Plant Project with its joint venture partners for a total contract value of RM993,888,000 million. Salcon is the lead partner in the consortium.

With a strong foothold and solid reputation in the water and wastewater market, Salcon envisions itself to be in the forefront of future projects in other parts of Asia which has tremendous growth for expansion.

While keeping on track in the water and wastewater business, Salcon ventured into two new business sectors ie Property Development and Technology Services to diversify its income stream.

In early 2014, Salcon ventured into technology services as its 3rd core business. The Group invested RM23.5 mil to acquire 50.1% in Volksbahn Technologies Sdn Bhd (VBT), a fibre-optic cable layer and telecommunications service provider, to build and maintain 108 km of fibre-optic cables for public transport operator Syarikat Prasarana Negara Bhd.

Source obtain from http://www.salcon.com.my/company/company-profile

Let talk part by part.

First Part, Let talk about water and waswater related business.

Non-Revenue Water or NRW is the amount of treated water that is put into a supply system but does not bring in revenue to the water supply company. The main components that contribute to NRW are pipe leakages, reservoir overflows, meter under-registration and illegal connections.

SALCON offers comprehensive and holistic solutions in controlling NRW losses to acceptable levels, using modern NRW concepts and techniques in:

• Pressure management
• Active leakage control
• Speed & quality of repairs
• Infrastructure management
• Meter replacement programme
• Billing data management
• Identifying illegal connections

Through implementation of NRW reduction and control works in various projects, SALCON has provided benefits to our clients in:

• More water to be made available for the people
• Conserving valuable water resources
• Reduced operational expenditure
• Reduced pumping thus save energy and environment
• Less interruption and contamination in water supply
• Improved financial situation of utilities by improving revenue and deferring capital works program

Source obtain from http://www.salcon.com.my/core-business/water-and-wastewater/water/non-revenue-water

Why talk about this?

1. The government is focusing on reducing non-revenue water (NRW) to 31% by the end of the 11th Malaysia Plan (11MP), Minister of Water, Land and Natural Resources Dr Xavier Jayakumar said.

He said, he was personally dissatisfied with the NRW rate which recorded an average loss of 5,929 million litres per day (MLD) of treated water, which was sufficient to meet the water demand in Selangor at 3,316 MLD or Johor (1,320 MLD).

“One of the primary causes for this is mainly old pipes, especially the fragile and leaky asbestos cement (AC) pipes that are still widely available in the distribution system by 27% or 41,560km according to the 2017 statistics.

“In this regard, among the initiatives taken is to implement the National NRW Reduction Programme 2018/2020 involving an allocation of RM1.39 billion until 2020, where its main scope is to change and replace the pipes on a large scale,“ he said.

Source obtain from https://www.thesundaily.my/local/govt-to-reduce-non-revenue-water-to-31-by-end-of-11mp-YX550230

To know more about the story do click above linkage as i only copy paste certain part of the article.

2.  Six states have agreed to increase water tariffs, Water, Land and Natural Resources Minister Xavier Jayakumar told the Dewan Rakyat today.

Source obtain from https://www.freemalaysiatoday.com/category/nation/2019/04/10/6-states-agree-to-increase-water-tariffs-says-minister/

Above news is telling us the government is serious to reduce NRW. However, it incur cost to replace water pipe. Therefore, the cost of improving NRW got to pass down to the people. So, from above news, there is high possiblity water theme play stock will be moving.

3. Dam Water Level at critical level that push state government to manage their NRW at their utmost interest. Without water, factory can't operate as they need water to cool down certain machinery. As human being, we also can't live without water and this will affect our daily interest in term of water usage such as taking bath, car wash and etc. 

Water dam related news can be obtain by clicking below linkage : 

https://www.freemalaysiatoday.com/category/nation/2019/03/24/cloud-seeding-for-penang-if-dam-water-level-drops-below-40/

https://www.nst.com.my/news/nation/2019/02/464157/water-reserves-two-major-johor-dams-dip-critical-levels

4. Various figures from PAAB, SPAN and industry players suggest that capital investments/capex for the water sector, if viewed over the longer term and on a bigger scale, would amount to RM77bil.

According to SPAN’s estimates, of this value, 70% is the estimated capex needed for nationwide water resource and supply systems and new sources of raw water that involve the construction of dams, off-river storage and new water treatment plants (WTPs). 

The balance 30% is the estimated total value of replacing the entire network of old asbestos cement (AC) pipes spanning 43,980km.

CIMB Research pointed out other more recent estimates of water capex (according to Bernama which quoted Selangor Chief Minister Amirudin Shari) include a RM30bil dedicated to the water infrastructure in Selangor. 

This is proposed to be implemented from 2019F over a 30-year period (RM1bn p.a.) to improve the state’s overall water services. More specifically, on non-revenue water (NRW), which is the rate that measures the percentage of water loss from distribution pipelines, a total of RM13bn is needed to reduce nationwide non-revenue water (NRW) from 37% in 2015, to 25% in 2020F, and further down to the state’s targeted 15% in 2030F.

Source obtain from https://www.klsescreener.com/v2/news/view/512257/cimb-research-sees-rm77b-capex-for-water-infra

Second Part of the buinsess : 

Under Salcon’s technology services division, its 50.1%-owned subsidiary, Volksbahn Technologies Sdn Bhd (VBT), has secured a 15-year concession from Prasarana Malaysia Bhd to lay and operate fibre-optic cables along the light rail transit (LRT) and monorail lines in the Klang Valley.

Leong said the group has to lay fibre-optic cables on 108km of transport lines, covering about 85 LRT and monorail stations.

“We have signed up with major telcos (telecommunications companies) such as Celcom Bhd, U Mobile Sdn Bhd and Digi Telecommunications Sdn Bhd to lease broadband facilities to their customers, leveraging our fibre-optic cable network,” Leong said.

VBT also signed a master agreement with edotco in August last year to “fiberise” its 1,400 cell sites, which will provide mobile backhaul services to other telcos.

Above information obtain from https://www.theedgemarkets.com/article/new-investments-see-profit-%E2%80%94-salcon

Let talk about fibre optic.

Recent Possibile development from salcon

1. Salcon Bhd said its engineering unit has secured a water treatment plant construction contract in Sabah worth RM124.7 million.

In an exchange filing today, Salcon said the contract — awarded to its wholly-owned subsidiary Salcon Engineering Bhd by Rintis Dinamik Sdn Bhd — will involve works for the capacity expansion works for the Telibong II water treatment plant in Tamparuli, Sabah.

The expansion, which will be carried out on its main pipeline and storage tank, will increase the plant’s capacity from 80 million to 160 million litre a day.

Source obtain from https://www.theedgemarkets.com/article/salcon-bags-rm1247-mil-water-treatment-plant-contract

2. Salcon Bhd has appointed businessman Tan Sri Abdul Rashid Abdul Manaf as its new chairman effective today.

In a filing with Bursa Malaysia today, Salcon said that Abdul Rashid is the founder director of Eco World Development Group Bhd and is also presently the group chairman of Cahya Mata Sarawak Bhd.

Source obtain from https://www.theedgemarkets.com/article/salcon-appoints-tan-sri-abdul-rashid-new-chairman

A big guy carry the big name from reputable company is joining SALCON. What make him a founder of ECO World and Group Chairman of CMSB joining into this company. There must be some thing he found it worth to join and make this company turnaround.

FINANCIAL SNAPSHOT

In the past since mid 2014 till current, there is never once SALCON post consecutive 3 quarter profit in a roll. So, if this happen which mean there is possibility a turnaround for this counter base on interepreation on financial result. Although earning may not look that good for the past 2 quarter which translate about average 9.6% profit margin. 

Techncial Outlook :

Weekly Chart Outlook

SUPPORT : 0.275

RESISTANCE : 0.35 ; 0.40 ; 0.43

Daily Chart Outlook

Technical Interpretation : 

1. MACD GOLDEN CROSS : BULLISH SIGNAL

2. SWING-HERO INDICATOR : BULLISH SIGNAL

3. IMPROVE OF TRADING INTEREST WITH MORE BUYING INTEREST

Malaysia Short-Term Technical Analysis Workshop

Date : 16 April 2019

Time : 2.30pm - 4.30pm

Language： English

Location : Level 2, P-16, Icon City, No: 1B, Jalan SS8/39, Petaling Jaya, 47300, Selangor

Registration Link : https://www.eventbrite.com/e/malaysia-short-term-technical-analysis-workshop-tickets-59892323552?aff=ebdssbdestsearch

马股免费技术讲座会

日期： 18 April 2019

时间： 2.30p.m- 4.30 p.m

语言： 华语

地点： Level 2, P-16, Icon City, No: 1B, Jalan SS8/39, Petaling Jaya, 47300, Selangor

注册链接：https://www.eventbrite.com/e/59893455939?aff=ebdssbdestsearch

大马投资分享会 | Vol .1

日期： 21 April 2019

时间： 1.30p.m- 5.00 p.m

语言： 华语

地点： B-2-13A Plaza Arkadia， No 3, Jalan Intisari Perdana, Desa ParkCity

注册链接：https://www.eventbrite.com/e/vol-1-tickets-60046577931?aff=ebdssbdestsearch

FB : https://www.facebook.com/Steventheeinvestment/

Telegram :  https://t.me/steventhee628

免责申明: 以上文章纯属个人意见以及学术性分享，不构成任何买卖建议。在你做出任何买卖之前，建议您和你的股票经纪质询任何投资意见。买卖风险自负

Disclaimer: Above article is for educational sharing purpose. Kindly consult your dealer/remisier for any investment advise before you make any decision. Trade at your own risk.