Background of PBA:

PBA was established in May 2000 as a holding company. It is listed on the Main Board of Bursa Malaysia in April 2002. The company was originally formed to manage the water supply needs of Penang, Malaysia. It has since expanded its operations to include water treatment, training, and renewable energy. Overall, PBA Holdings Berhad has established itself as a leading water supplier in Malaysia with a strong commitment to serving the community and protecting the environment.

Here are the 6 reasons why I think PBA is worth RM2.50.

​1. Turnaround story QoQ. Core earnings turnaround to RM26m profit from RM3m loss last quarter. Why? Because revenue increased while cost decline. Revenue up due to water tariff increase for certain users in Penang. Cost down due to the waiver of ICPT charges by TNB for Water Operators for the second half of the 2023.

2. PBT almost TRIPLED. Last year 3Q PBT was RM10m, this year RM29m. Why up? Revenue up due to water tariff increase for certain users in Penang. 3Q 2022 should look at PBT not net profit due to tax reversal distorting comparison.

3. How to get RM2.50? So, exclude tax effect one year after the new tariff PBA should make RM104m or 32 sen. I use 8x PE to get RM2.56 round down RM2.50.

4. Utilities sector is HOT now. YTL Power, YTL, Tenaga already gone up a lot. Water play is the next one. Most people don't know about water tariff increase in Penang since 1/1/2023 for non-domestic and special categories users.

Details here:

https://pba.com.my/pdf/news/2022/29112022_PBAPP_NonDomesticTariff_ENG.pdf

5. Net cash of RM193m. It has cash RM213m, total debts RM20m. Just the net cash only already 58 sen per share!

Source:

https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=225389&name=EA_FR_ATTACHMENTS

6. Its Book Value is RM2.88

Source:

https://www.bursamalaysia.com/bm/market_information/announcements/company_announcement/announcement_details?ann_id=3398547