Data Centre Stocks (Bursa Malaysia)

[@FIRLco]

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[@Bursagod]

Help analyse PBA Holdings Bhd

[@FIRLco]

Related to Penang government. Tariff doubled so means expected revenue and profit will be more in FY2024. But then there's a pipe burst in Penang so might have some loss in revenue.

[@Bursagod]

I look forward to FY25 profit

[@SunWuKon9]

As of now, no sell-side analyst is covering the stock, hence a lot of information has not been priced in. I believe PBA would be good investment for any fund manager seeking exposure to ASEAN water utilities companies with good value and growth. Here are some of my notes: At a share price of RM1.82, PBA currently has a market cap of RM603m. With a net cash position of RM211.7m (total cash of RM232.1m less total debt of RM20.4m), PBA’s enterprise value stands at RM391m. Healthy net operating cash flow of RM179m in 2023 vs. RM103m in 2022. Rough estimates for 2024: revenue RM500m and PBT 150m, assuming no growth in water consumption. --- Recent developments on tariff hikes: Sector structural change. No longer sustainable to keep subsidising rates by keeping tariffs low. New regulations allow water operators in Malaysia to adjust tariffs rates every 3 years. Previously, some states have not seen tariff hikes in decades. Tariff charges per cubic meter in Malaysia are among the lowest when compared to other countries in Asia. Future tariff rates will be based on the Tariff Setting Mechanism (TSM) which takes into account opex + capex + profit cap, enabling water operators to catch up with costs. --- In Penang, new tariffs for Domestic consumers implemented on 1 Feb 2024. Previous tariff rates: 0-20 cu m = RM0.22 >20-40 cu m = RM0.46 >40-60 cu m =RM0.68 >60-200 cu m = RM1.17 >200 cu m = RM1.30 New tariff rates (1 Feb 2024): 0-20 cu m = RM0.62 >20-35 cu m = RM1.17 >35 cu m = RM2.07 New tariff rates for Domestic users will bring in additional RM86m in revenue according to PBA. But I believe they’re being conservative as my estimates indicate it’s closer to an additional RM100m revenue. --- For NON-domestic consumers, new tariff implemented on 1 Jan 2023. Previous tariff rates: 0-20 cu m = RM0.85 >20-40 cu m = RM1.05 >40-200 cu m =RM1.30 >200 cu m = RM1.45 New tariff rates (1 Jan 2023): 0-35 cu m = RM1.57 >35 cu m = RM2.17 PBA’s production cost RM1.75 per cu m. --- Q4 2023: The deferred tax expense of RM25.7m is a non-cash item. Lower than expected earnings, PBA could not optimally utilise its reinvestment allowances. Reconciliation of tax usually done at end-year. RM170m of available tax credit to utilised within next 2yrs. Water pipe burst in Dec lead to lower revenue and higher costs, else PBT would’ve been much better. Full effect from new tariff for domestics users will be in 2Q 2024 from. Billing is bi-monthly, first billing in Mar 2024, then May and so on. Non-domestic users (accounted for 77% of 2023 revenue) water consumption should increase by at least 5% annually. --- Warren Buffett and Charlie Munger have always sought to invest in companies with monopoly-like status, ideally akin to an unregulated toll bridge. PBA's long-standing issue of low water tariffs has now been resolved, allowing for potential tariff increases every 3 years. Three decades of pent-up earnings (tariffs previously couldn't be increased meaningfully) are now being unleashed, paving the way for superior earnings growth going forward. If the market values PBA at a reasonable 10x P/E on RM150 million earnings, we're looking at a share price of RM4.50 (about 150% upside to current share price of RM1.80). Other water utilities/utilities/water-related stocks on Bursa Malaysia trade at much higher P/E multiples (in the teens), unattractive ROEs, in a high net debt position. --- Introduction to the state of Penang: PENANG: THE SILICON VALLEY OF THE EAST The state of Penang, nestled along the northwest coast of Peninsular Malaysia, needs no introduction in the global electronics manufacturing sector. Despite its diminutive stature with just over 1,000 square kilometers of land area and a 1.8 million-strong population, Penang commanded an estimated 5% of global semiconductor exports in 2019, according to data compiled from the Department of Statistics Malaysia (DOSM) and UN Comtrade. Today, Penang houses more than 350 MNCs that are supported by over 3,000 manufacturing-related SMEs. As Penang flourished as a vibrant, regional E&E manufacturing hub, the local talent pool steadily accumulated a wealth of business intelligence and technical experience, enabling the robust supply chain to evolve in tandem with technology megatrends. This, in turn, enabled the State to focus on pursuing investments that have propelled the industry up the value chain, away from its beginnings as a low-cost manufacturing hub. Consequently, Penang has seen a proliferation of upstream technology-related investments in high value-added functions in recent years, ranging from research and development (R&D), design and knowledge-based solutions, and downstream advanced manufacturing and testing to global business service (GBS) and Centre of Excellence (CoE) activities. Penang’s growing significance in the global E&E value chain is demonstrated by its steady and resilient export performance in recent years. From 2014 to 2019, the State’s E&E exports grew at a compounded annual rate (CAGR) of 12% to reach RM210 billion (US$51 billion). It has emerged as a hub for professional, scientific and controlling instruments (including medical technology), with exports of these products growing at a 5-year CAGR of 15% to reach RM23 billion (US$6 billion) in 2019. E&E products, alongside professional, scientific and controlling instruments, collectively contributed between 77% and 82% of Penang’s total annual exports since 2014, and accounted for 50% of Malaysia’s exports in these two segments during the period. More impressively, despite the disruptions from the COVID-19 pandemic, Penang’s total exports continued to rise in 2020, growing 7% year-on-year to RM310 billion (US$75 billion), and a further 14% year-on-year in January and February 2021, driven by strong global demand for semiconductors. www.semi.org/en/sea-newsletter-penang-the-silicon-valley-of-the-east

[@ahmadmustakhimabdmutalib59]

Ur are a goodpodcast, please do the bahasa version , im sure ur will get more odieon 😊 same vid with bahasa miming

[@FIRLco]

kita cuba!

[@whatsuphuman145]

May I ask what's the app you're using to show the companie's info

[@FIRLco]

Xifu financial app!

[@whatsuphuman145]

@@FIRLco Tqsm!

[@alyaqistina8969]

Data Centres business is not just building the data centres, the location of it, the availability of electricity without interruption and backup, the huge capacity of telecommunications facilities and backup plus all the logistics. Most importantly it needs colo partners to sign up even before its operation. Otherwise it will go south very soon.

[@FIRLco]

you are right!

[@oongkuoksung9756]

Why DUFU didn't get benefited

[@FIRLco]

didn't cover it ser coz if go down the rabbit hole, there will be a lot more other small segments (eg HDD, OSAT etc). It will be under HDD segment. Others include JCY and Notion.

[@kianyaplim3193]

Data Center is a very high cost investment. And the maintenance experience needed. About the return are unsecured. Don't expect too high. Look people a bit too much concerned about it.

[@FIRLco]

Thanks for the insight! Majority of these companies are project based and are related to construction or more on the upstream side. But then again, they went up so the margin of safety may not be as attractive.

[@user-hi8fk1oq3m]

vstecs , ranhill skyrocket

[@FIRLco]

very nice!

[@namazlur78]

Data centers are lucrative but comes with penalties. Especially environmentally

[@FIRLco]

all new inventions come with a cost