Stock With Momentum: PBA Holdings

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This article first appeared in The Edge Financial Daily, on December 30, 2015.


PBA Holdings Bhd(-ve)

PENANG’s water operator PBA (Fundamental: 1.5/3, Valuation: 2.2/3) triggered our momentum algorithm yesterday, closing 5.4% higher at RM1.36 on heavy volume. There was no significant development recently save for quarterly results announcement on November 27.

For 3Q2015, net profit surged 53.7% y-y to RM13.1 million on the back of a 26.4% growth in revenue to RM82.4 million, mainly due to the review in water tariffs with effect from April 1 for domestic and trade consumers.

Concurrently, the company declared an interim dividend of 1.75 sen, which went “ex” on December 16. Dividend was consistently 3.75 sen over the past 3 years, translating into a 2.8% yield.

Penang State Secretary and Penang Development Corporation own 55% and 10% equity interests in the company, respectively. PBA also has a 26% stake in Pinang Water Ltd, which supplies treated water to Yichun City in China, though profit contribution from the associate company is immaterial.