Moya Holdings Asia - RHB Invest 2019-08-20: 1H19 Impacted By Absence Of One-offs


Moya Holdings Asia - 1H19 Impacted By Absence Of One-offs

  • Maintain BUY with a lower Target Price of SGD0.083 from SGD0.095, 22% upside.
  • Moya reported a lower 1H19, mainly due to the absence of a SGD13.6m one-off FX gain and a one-off write-back of provision of SGD3.8m.
  • We have taken into account the greater FX losses as well as higher interest into our forecasts, resulting in FY19F PATMI being reduced 13%, which in turn results in our lower Target Price. Trading at an effective 3.7x FY19F EV/EBITDA is very attractive, and as a result, we maintain BUY.

Extension of concession likely by the end of 2019.

  • MOYA HOLDINGS ASIA (SGX:5WE) has been negotiating the extension of its Acuatico concession with the Indonesian Government since 3Q17. Management shared that 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 by the end of the year.

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 could also come from tenders that were secured over the past few months.

Trading at just 3.7x 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 3.7x 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 | 2019-08-20
SGX Stock Analyst Report BUY MAINTAIN BUY 0.083 DOWN 0.095