COMMENTS ON PBA HOLDINGS BHD (5041)

FIGURE 1: PBA HOLDINGS BHD LAST 5 YEARS SHARE PRICE TREND

**analysis based on 2018 annual report.

1.       GENERAL INTRO: PBA is engaged in the abstraction of raw water, treatment of water, and supply and sale of treated water to consumers in the State of Penang.

2.       NOTABLE POINTS:

a.       In 2018 report, PBA’s revenue from the sale of water amounted to RM311.09 million, as compared to RM295.46 million in 2017. As such, it recorded a revenue growth of 5.29% year-on-year. Nevertheless, the single item that generated the strongest impact in it books is the recognition of RM137.60 million in unabsorbed RA as a tax liability. As a result, PBAHB is compelled to record a loss after tax of RM103.43 million for the first time in its 18-year history.

3.       IS THIS COUNTER A STRONG GROWTH STOCK?        

a.       REVENUE RANGE (RM million): 334.7 million as reported in 2018 annual report, this is a medium revenue company.

b.      SHARE PRICE: from 2015-2020, share price ranged from ~ RM1.00 to RM1.40.

c.       EARNING PER SHARE (EPS): earning per share in last 5 years was overall fluctuating, ranging from -31.25 to 18.66 sen

d.      FUTURE POTENTIAL/PROSPECTS: share price expect to be stable in the next few years

e.      CAPITAL EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 53 million, around 4% of total assets.

4.       IS THIS A STRONG DIVIDEND STOCK?             

a.       DIVIDEND YIELD: in 2018 financial year, PBA declared a dividend payout of 4 sen per share to shareholders, which amounts to a dividend yield of 3.67%.

b.      DIVIDEND PAYOUT RATIO: N/A.

c.       CONSISTENCY: the dividend payout was consistent, the dividend paid to shareholders in the last five years ranged from 3.5 to 4 sen.

5.       IS THE MANAGEMENT PERFORMANCE GOOD?

a.       RETURN ON EQUITY (ROE): in 2018 financial year, PBA reported a poor return of shareholders’ equity, at -14.86%.

b.      COST-TO-INCOME RATIO: cost-to-income ratio is high, at 827%.

6.       OTHER INDICATORS:

a.       CASH FLOW: cash flow is positive, around RM 182.3 million, equivalent to RM 0.55 per share.

b.      SUPPORT BY INSTITUTIONAL INVESTORS: this counter is not well supported by institutional investors, there are only 8 institutional investors at top 30 major shareholders list, not including insurance companies/investment funds. Its major shareholders are State Secretary, Penang (55%) and Perbadanan Pembangunan Pulau Pinang (10%).

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