Moya Holdings Asia

Moya Holdings Asia | Buy

Target price: S$0.15

April 9 close: S$0.099

RHB Research, April 9

Moya's founding shareholder, Moya Holding, sold out its stake in the group. In January, it sold a stake to majority shareholder Tamaris infrastructure at 10 Singapore cents each. This was followed by a sale to Gateway Partners – a private equity fund which is now a substantial shareholder – in April at 11 Singapore cents per share or a 10 per cent premium. We believe that this is a vote of confidence on the company's growth prospects.

We understand that the management is currently in talks with the Indonesian water authority (PDAM) to extend to 27 years the concession for its Aquatico assets (which have seven years remaining). An extension would benefit Moya Holdings Asia, and would lead to a re-rating of the stock.

With more than S$100 million in cash on its balance sheet, more potential acquisitions could materialise. We believe that Moya is likely to continue to acquire and consolidate the Indonesian private water treatment players, which would further boost its earnings growth.

The company may also use part of its cash hoard to lower debt and reduce financing costs of S$7 million per quarter currently.

Management aims to reach an overall 20,000 lps (litres per second) from its existing 13,000 lps capacity this year.

With further cost savings, volume expansion and the recovery of its non-revenue water (NRW) providing strong organic growth – and possibly, additional acquisitions in the pipeline to further boost its earnings – the outlook is bright for Moya.

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