Moya - RHB Invest 2019-05-02: 1Q19 Hit By Absence Of FX Gains; Still A BUY


Moya - 1Q19 Hit By Absence Of FX Gains; Still A BUY

  • BUY, new Target Price of SGD0.095 from SGD0.11, 17% upside.
  • MOYA HOLDINGS ASIA LIMITED (SGX:5WE) reported lower 1Q19 earnings, mainly on the absence of a SGD10.1m one-off gain and a SGD0.7m FX loss.
  • We imputed further FX losses and higher interest costs into our forecasts, which dropped our FY19F PATMI by 14% and decreased our Target Price. Moya is trading at 6.3x FY19F EV/EBITDA, which is attractive.

Hit by FX costs.

  • The earnings decline in 1Q19 was mainly due to the absence of a SGD10.1m one-off gain from FX as well as a SGD3.2m one-off write-back of provision for impaired trade receivables.
  • Moya was also hit by a SGD0.7m FX loss. Business remains stable with 3% y-o-y growth and a 19% boost in gross profit. EBITDA rose by 16% y-o-y to SGD18.9m

Extension of concession likely after election.

  • Moya has been negotiating the extension of its Acuatico concession with the Indonesian Government since 3Q17. Management revealed it will likely commit to a certain amount of capex to invest in a new 3,000 litres/s plant, as well as decrease non-revenue water (NRW) by 20% in 5-10 years. In addition, it will stop handling customer service or collecting water tariffs from end-consumers, and deal solely with the government.
  • The increase in volume will offset a reduction of water tariffs, which should keep EBITDA unchanged. We expect its concession to be extended after Indonesia’s general election, which was held on 17 Apr.

Inorganic and organic growth.

  • Moya intends to use a portion of the rights issue proceeds for M&A. We understand it is currently in negotiations with a few parties on this matter, and management is optimistic that one acquisition will be completed by 2H19. Based on its track record, we expect the acquisition to be yield-accretive and should further boost PATMI in FY19.
  • In addition, organic growth should also come from tenders that were secured over the past few months.

Trading at just a 6.3x FY19F EV/EBITDA.

  • Moya is trading well below price levels of its recent rights issue (SGD0.095/unit), as well as below Gateway’s cost of entry of c.SGD0.103/unit where majority shareholder Tamaris Infrastructure also purchased 200m shares at SGD0.10/unit in Jun 2018.
  • On an EBITDA level, it is trading at just an effective 6.3x FY19F EV/EBITDA which is attractive. As a result, we maintain BUY.
  • Key downside risks include changes in government regulations affecting its outlook.
  • RHB is the only broker covering Moya.

Jarick Seet RHB Securities Research | Lee Cai Ling RHB Invest | 2019-05-02
SGX Stock Analyst Report BUY MAINTAIN BUY 0.095 DOWN 0.110