PBA: Profits Soared on Higher Tariffs

Results Update

For QE30/6/2015, PBA's net profit soared 8 folds q-o-q or 77% y-o-y to RM14.6 million. At the same time, revenue increased 17% q-o-q or 12% y-o-y to RM75 million. The increased revenue was mainly due to the review in water tariffs which were raised with effect from 1 April  2015 for domestic and trade consumers. The increase in water revenue led to a jump in profits.  


Table: PBA's last 8 quarterly results


Chart 1: PBA's last 41 quarterly results

Valuation
 
PBA (closed at RM0.95 on Aug 28, 2015) is now trading at a trailing PER of 13 times (based on last 4 quarters' ESP of 7.4 sen). If we assume that the last quarter's EPS of 4.4 sen can sustain for the next 3 quarters, then its forward PER is 5.4 times. At that PER, PBA is deemed fairly attractive. In addition, PBA also pays a dividend totaling 3.75 sen a year or giving a DY of 3.9%.

Technical Outlook

PBA has been in a downtrend for the past 17 months after it made a high of RM1.67 in March 2014. It has good support at RM0.80-0.85 & resistance at RM1.00.


Chart 2: PBA's monthly chart as at Aug 28, 2015 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance & attractive valuation,PBA is rated a good stock for medium-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, PBA.