Excerpts from RHB Research report


Analyst: Jarick Seet

We visited Moya’s water treatment plants in Jakarta, which it acquired in 2017, and came away positive on its outlook. It is now Indonesia’s largest water treatment operator.

It could likely see greater cost savings due to its improved position in negotiating on piping, chemicals and manpower.

Moya Holdings

Price: 9 c

Target: 17 c

We also expect Moya to acquire more entities in the near term, as it aims to achieve 20,000 litres per second in capacity this year.

The restructuring and potential extension of its concessions could also significantly boost to its prospects. Maintain BUY, with a SGD0.17 TP (91% upside) .


Strong organic growth from the reduction of non-revenue water (NRW) and increased connections. Only 22% of Indonesia’s population has access to clean piped water, and many still rely on higher-cost water sources like jerry cans, which cost IDR1,000-1,500 for a 20-litre unit. In contrast, piped water costs just IDR7 per litre.

canal2.18Water from the West Tarum Canal is treated by Moya into piped water for thousands of users in Jakarta.
Photo by Ngo Yit Sung
Management is also keen on drastically reducing its NRW by more than 50% by 2020, which should boost revenue and margins. This is because less cost would be needed, compared to a new greenfield project.

In addition, water tariffs for some regions it has a presence in may likely be increased by 8-12% annually, which would be positive for Moya’s margins.

Forecasts & Valuations

Dec-16

Dec-17F

Dec-18F

Dec-19F

Total turnover (SGDm)

19

151

258

279

Net profit (SGDm)

3.0

12.5

28.0

32.9

DPS (SGD)

-

-

-

-

Return on average equity (%)

3.2

9.7

18.8

18.3

Source: RHB


More potential acquisitions. Management has fully consolidated Acuatico Pte Ltd’s (Acuatico) operations and streamlined most of its processes to integrate with its own existing operations.

We believe it is ready to acquire more private water operators in Indonesia.

As of 3Q17, the company still has a warchest of SGD100m – from which it may likely pare down its debts or use to acquire more private players or competitors. Management highlighted that Moya aims to increase its water processing capacity to over 20,000 litres per second by the end of 2018. Its current capacity is about 13,000 litres per second.

Restructuring and extension of renewal for Acuatico. Indonesia’s largest water operators are in the midst of talks with the Government, on restructuring the expiring agreements.

The discussions centre on handing over the billing collection to the Government from 2017 onwards. However, we think that any agreements made on the restructuring would likely include an extension for the existing expiring concessions.

Acuatico’ concession has about 5-7 years remaining for its portfolio, and an extension to 20-25 years would be extremely positive to Moya. This is because a much lower depreciation value per year would boost its margins, and increase the value of its assets.

JarickSeet11.14Jarick Seet, RHB analyst.Maintain BUY, on cost savings and catalysts. With further cost savings, volume expansion, the recovery of its NRW providing strong organic growth, as well as additional acquisitions in the pipeline that would further boost NPAT, we believe the outlook is bright for Moya. 

We recommend investors to accumulate the stock after the recent share price correction. Thus, we maintain our BUY call, with an unchanged DCF-backed TP of SGD0.17. 


Key risks to our call include changes to the political backdrop.


Full report here.


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