Stock Market Enthusiast
PBA - Unsung Hero: This Undervalued Water Utility is Poised to Make Waves (New Intrinsic Value is RM3.60) - KingKKK
New Intrinsic Value = RM3.60
1. My new Intrinsic Value for PBA is RM3.60 after the news of new tariff yesterday. The news article is as below.
Penang's water tariff still among the lowest [Updated] (nst.com.my)
52% of Penang users will only pay RM6.20 per month | The Star
My 2024 EPS estimate is increased to RM120 million
2. This is after increasing domestic water tariff assumption.
| RM million | FY2021 | FY2022 | FY2023F | FY2024F | FY2025F |
| Revenue | 342.10 | 347.99 | 431.33 | 511.53 | 541.49 |
| PBT | 35.40 | 33.00 | 81.57 | 157.76 | 168.73 |
| Net Profit | 44.03 | 77.12 | 61.99 | 119.90 | 128.23 |
| EPS | 0.1330 | 0.2330 | 0.1873 | 0.3622 | 0.3874 |
How do I get Intrinsic Value of RM3.60? 10 * 36.22 = 3.62
3. Based on the RM120 million net profit, I get my EPS of 36.22 sen for 2024. Using 10x PE I get RM3.62 as my new Intrinsic Value.
| Valuation | |
| PE | 10 |
| EPS 2024 | 0.3622 |
| Intrinsic Value | 3.62 |
10x PE is OK because it is below TENAGA, YTLPOWER and RANHILL. It is also about 20%-25% below RANHILL PE.
| PE | |
| YTLP | 11x |
| TENAGA | 20x |
| RANHILL | 14x |
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.
Some useful charts, source gurufocus:
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