Moya Holdings Asia

Moya Holdings Asia | Buy

May 2 close: S$0.099

Target price: S$0.15

RHB, May 2

Moya reported a sterling Q1 2018, with Patmi surging 560 per cent year-on-year to S$8.8 million, making up 31.9 per cent of our FY18 estimate. Q1 2018 revenue also spiked by 268 per cent year-on-year to S$45.06 million, mainly due to the acquisition of Acuatico in 2017. Going forward, we do expect 2018 to be a stellar year for the company, with acquisitions and the extension of the concession in the pipeline, as well as the full accretion of Acuatico's numbers for the full year to drive earnings growth.

With the planned expansion in capacity for two of its water plants, Bekasi and Tangerang, coupled with non-revenue water (water that has been produced and is lost before it reaches the customer) reduction in the next five years, Moya is set to enjoy strong organic growth. It is now Indonesia's largest water treatment company in terms of capacity, and management aims to reach 20,000 litres per second in capacity this year, from 13,000 litres per second presently. This would also give it an advantage, especially when negotiating terms in buying out existing smaller players. With further cost savings, volume expansion, and the recovery of its non-revenue water providing strong organic growth – coupled with additional acquisitions in the pipeline to further boost net profit after tax – we think the outlook is bright for Moya.

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