Small Cap Asean Research
Malaysia Company Update
4 August 2025
Ranhill Utilities (RAHH MK): Let The Hikes Begin; Stay BUY
Utilities | Utilities
- Maintain BUY, TP rises to MYR1.70 from MYR1.37, 26% upside with c.1% FY26F (Jun) yield. Ranhill Utilities’ subsidiary, Ranhill SAJ (RSAJ, 80%-owned) announced a set of new water tariffs effective 1 Aug for all types of users, including a new tariff category for data centres (DCs). The adjustment is necessary to replace ageing pipes, expand capacity, and support water treatment plant projects such as Layang 2 Phase 2 (160 million litres per day (MLD)), Semanggar (50 MLD) and Semanggar 3 (120 MLD).
- Details. Based on details furnished by RSAJ, the upward revision in water tariffs for Johor ranges MYR0.20-0.35/cu m, reflecting a 8-11% increase for residential bands 3 and domestic bulk meters. Meanwhile, tariffs for non-domestic users rose by 3-51%, with the non-domestic band 2 users seeing the highest increase of 51% to MYR5.30/cu m, from MYR3.50/cu m. New tariffs for DCs are slightly higher than non-domestic band 2 users, at MYR5.33/cu m (Figure 1). This is still lower than Singapore’s non-domestic industrial water prices of SGD1.75/cu m or c.MYR5.80/ cu m (including waterborne tax of SGD1.09).
- Earnings impact. Post-tariff hike, we estimate the new blended water tariff in FY26F (Jun) to be MYR2.88/cu m from MYR2.56/cu m (a c.13% increase) for an 11-month period, since the new tariffs took effect on 1 Aug. Nonetheless, we expect the blended water tariff rise at a higher quantum of c.20% YoY to MYR3.14/cu m in FY27, from MYR2.62/cu m prior to the tariff hike. As a result, our earnings estimates for FY26 and FY27 are increased by 15.3% and 23.4%. We also revise our water consumption growth assumption for RSAJ to 4% (from 3.5%) from FY30 onwards, as we envisage robust demand from completed DCs and the Johor-Singapore Special Economic Zone. With that, we arrive at a new SOP-derived TP of MYR1.70 (previously MYR1.37), which also includes a 4% ESG premium.
- According to DC Byte’s Market Spotlight Report released in July, Johor has a live DC IT capacity of 487MW while 324MW is currently under construction, followed by another 1,473MW that is committed capacity. We envisage 300MW in additional DC capacity coming online annually for the next six years. Our estimates indicate that DC water consumption is roughly 8-15% of the non-domestic water usage in the next three years.
- With tariff hikes already in place, a catalyst for RAHH is the National Non-Revenue Water Programme to be implemented over 2025-2030, with a MYR2.5bn allocation. RAHH may benefit from the aforementioned plan via its subsidiary, Ranhill Technologies (under the consultancy and services arm) which has clinched water projects beyond Johor – the MYR61.5m job to replace old pipes in Kelantan covering a total length of 103km secured in Mar 2022. In FY24, RAHH has not secured new jobs under its services arm. Downside risks to our outlook: A decrease in water consumption.
Forecasts and Valuation
| Dec-23 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|
| Total turnover (MYRm) | 2,281 | 3,349 | 2,602 | 2,745 |
| Recurring net profit (MYRm) | 32 | 55 | 52 | 60 |
| Recurring net profit growth (%) | 42.5 | 70.5 | (5.2) | 16.5 |
| Recurring P/E (x) | 54.22 | 31.80 | 33.53 | 28.78 |
| P/B (x) | 2.2 | 2.2 | 2.1 | 2.1 |
| P/CF (x) | 7.60 | 4.95 | 8.05 | 11.45 |
| Dividend Yield (%) | 1.1 | 1.1 | 1.1 | 1.1 |
| EV/EBITDA (x) | 4.48 | 3.66 | 4.05 | 3.67 |
| Return on average equity (%) | 7.5 | 6.9 | 6.4 | 7.3 |
| Net debt to equity (%) | 71.3 | 49.7 | 47.7 | 42.3 |
Source: Company data, RHB
Emissions And ESG
Trend analysis
The total emissions increased by 9% YoY in FY23 after recording >100% YoY increases in FY21 and FY22.
| Emissions (tCO2e) | Dec-22 | Dec-23 | Jun-25 |
|---|---|---|---|
| Scope 1 | 1,309,267 | 1,357,603 | na |
| Scope 2 | 291,556 | 292,907 | na |
| Scope 3 | 331,155 | 453,290 | na |
| Total emissions | 1,931,978 | 2,103,800 | na |
Source: Company data, RHB
Latest ESG-Related Developments
RAHH’s goal is to reduce its Scope 1 and Scope 2 emissions vs levels recorded in the base year of 2022, by 90% as early as 2050. The residual emissions will be addressed through carbon removal or offset solutions.
ESG Unbundled
Overall ESG Score: 3.2 (out of 4)
Last Updated: 27 Feb 2025
E Score: 3.3 (EXCELLENT)
RAHH is the most efficient water operator in Malaysia, as Johor has the lowest NRW per km of 20.2m3/km/day. It actively incorporates the circular economy model into its business operations. There are good disclosures within the sustainability reports on matters such as energy and water usage (within each segment), amongst others. It has been a constituent in the FTSE4GoodBursa Malaysia Index since 2019.
S Score: 3.0 (GOOD)
Apart from up-to-date safety and health policies, RAHH continues to invest in the development of its talent pool with talent development and management strategies centred on the 4Rs of strategic recruitment, retention, reward and rejuvenation.
G Score: 3.0 (GOOD)
Other than the departure from Practice 7.2 which encourages the board to disclose remuneration component in bands of MYR50,000 on a named basis for the top five senior management, the group adheres to most of the best practices listed in Malaysian Code on Corporate Governance.
ESG Rating History
The historical ESG rating has been consistently 3.2 from August 2023 to August 2025.
Source: RHB
Financial Exhibits
Key Information
| Asia | Malaysia |
| Utilities | Ranhill Utilities |
| RAHH MK | Buy |
| Valuation basis | SOP |
Financial summary (MYR)
| Dec-23 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|
| Recurring EPS | 0.02 | 0.04 | 0.04 | 0.05 |
| DPS | 0.02 | 0.02 | 0.02 | 0.02 |
| BVPS | 0.61 | 0.62 | 0.64 | 0.65 |
| Return on average equity (%) | 7.5 | 6.9 | 6.4 | 7.3 |
Valuation metrics
| Dec-23 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|
| Recurring P/E (x) | 54.22 | 31.80 | 33.53 | 28.78 |
| P/B (x) | 2.2 | 2.2 | 2.1 | 2.1 |
| FCF Yield (%) | 6.5 | 16.7 | 9.0 | 5.3 |
| Dividend Yield (%) | 1.1 | 1.1 | 1.1 | 1.1 |
| EV/EBITDA (x) | 4.48 | 3.66 | 4.05 | 3.67 |
| EV/EBIT (x) | 17.19 | 11.26 | 15.92 | 11.87 |
Income statement (MYRm)
| Dec-23 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|
| Total turnover | 2,281 | 3,349 | 2,602 | 2,745 |
| Gross profit | 396 | 733 | 576 | 592 |
| EBITDA | 547 | 622 | 566 | 616 |
| Depreciation and amortisation | (405) | (419) | (422) | (425) |
| Operating profit | 143 | 202 | 144 | 190 |
| Net interest | (12) | (46) | (35) | (38) |
| Pre-tax profit | 148 | 179 | 122 | 168 |
| Taxation | (44) | (66) | (33) | (67) |
| Reported net profit | 58 | 55 | 52 | 60 |
| Recurring net profit | 32 | 55 | 52 | 60 |
Cash flow (MYRm)
| Dec-23 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|
| Change in working capital | 68 | 85 | 10 | 1 |
| Cash flow from operations | 229 | 351 | 216 | 152 |
| Capex | (116) | (60) | (60) | (60) |
| Cash flow from investing activities | (63) | (49) | (49) | (49) |
| Dividends paid | (77) | (40) | (32) | (34) |
| Cash flow from financing activities | (292) | (195) | (169) | (182) |
| Cash at beginning of period | 389 | 279 | 363 | 361 |
| Net change in cash | (126) | 107 | (2) | (79) |
| Ending balance cash | 263 | 143 | 202 | 125 |
Balance sheet (MYRm)
| Dec-23 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|
| Total cash and equivalents | 279 | 363 | 361 | 283 |
| Tangible fixed assets | 315 | 217 | 210 | 200 |
| Total investments | 240 | 259 | 273 | 289 |
| Total assets | 2,980 | 3,863 | 3,215 | 2,756 |
| Short-term debt | 156 | 150 | 167 | 156 |
| Total long-term debt | 843 | 743 | 726 | 616 |
| Total liabilities | 1,969 | 2,795 | 2,103 | 1,598 |
| Total equity | 1,011 | 1,068 | 1,112 | 1,158 |
| Total liabilities & equity | 2,980 | 3,863 | 3,215 | 2,756 |
Key metrics
| Dec-23 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|
| Revenue growth (%) | 32.1 | 46.8 | (22.3) | 5.5 |
| Recurrent EPS growth (%) | 35.9 | 70.5 | (5.2) | 16.5 |
| Gross margin (%) | 17.4 | 21.9 | 22.1 | 21.6 |
| Operating EBITDA margin (%) | 24.0 | 18.6 | 21.7 | 22.4 |
| Net profit margin (%) | 2.5 | 1.6 | 2.0 | 2.2 |
| Dividend payout ratio (%) | 33.4 | 35.3 | 37.3 | 32.0 |
| Capex/sales (%) | 5.1 | 1.8 | 2.3 | 2.2 |
| Interest cover (x) | 1.98 | 1.53 | 1.63 | 2.07 |
Figure 1: Changes in RSAJ’s domestic, non-domestic and special categories water tariffs which took effect on 1 Aug
| Type of use | Consumption amount (cu m) | Previous rate / cu m | New rate / cu m | % change | Previous minimum monthly charge (MYR) | New minimum monthly charge (MYR) | % change |
|---|---|---|---|---|---|---|---|
| Residential Band 1 | 0-20 | 1.05 | 1.05 | 0 | 10.50 | 10.50 | 0 |
| Residential Band 2 | >20-35 | 2.35 | 2.35 | 0 | 10.50 | 10.50 | 0 |
| Residential Band 3 | >35 | 3.15 | 3.50 | 11.1 | 10.50 | 10.50 | 0 |
| Domestic bulk meter | No bands | 2.55 | 2.75 | 7.8 | 25.50 | 27.50 | 7.8 |
| Non domestic Band 1 | 0-35 | 3.10 | 4.15 | 33.9 | 31.00 | 41.50 | 33.9 |
| Non domestic Band 2 | >35 | 3.50 | 5.30 | 51.4 | 31.00 | 41.50 | 33.9 |
| Data centres | Average rate | N.A. | 5.33 | N.A. | N.A. | 53.30 | N.A. |
| House of worship and welfare institutions | Flat rate | 1.60 | 1.65 | 3.1 | 16.00 | 16.50 | 3.1 |
| Shipping | Flat rate | 7.00 | 8.03 | 14.7 | 70.00 | 80.30 | 14.7 |
Source: Company data
Figure 3: DC capacity in Johor
Total IT MW in Johor: 5775 MW
- Live (8.44%): 487 MW
- Under Construction (5.6%): 324 MW
- Committed (25.51%): 1473 MW
- Early Stage (60.46%): 3491 MW
Source: DC Byte
Figure 4: Ranhill’s SOP valuation
| Assets | Stake | CY26F FCFE | Per share | Remark |
|---|---|---|---|---|
| Water asset – RanhillSAJ | 80% | 2,476.3 | 1.92 | CoE 6% |
| Ranhill Sabah Energy I | 60% | 1.4 | 0.00 | CoE 8% |
| Ranhill Sabah Energy II | 80% | 56.0 | 0.04 | CoE 8% |
| Ranhill Sabah Energy III (Sabah West Coast CCGT plant) | 60% | 111.3 | 0.08 | CoE 9% |
| Associates | various | 104.5 | 0.08 | 8x CY26F Target P/E |
| LSS4 | 100% | 85.9 | 0.07 | WACC 4% |
| Services (Worley & Bersekutu) | various | 42.4 | 0.03 | 8x CY26F Target P/E |
| No. of shares | 1,292.7 | |||
| Gross value | 2,882.6 | 2.23 | ||
| Net debt | (540.8) | (0.42) | ||
| SOP value | 1.81 | |||
| 10% SOP discount | (0.18) | |||
| Intrinsic value | 1.63 | |||
| 4% ESG premium | 0.07 | |||
| SOP-derived TP | 1.70 | |||
Source: Company data, RHB
Recommendation Chart
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-05-20 | Buy | 1.37 | 1.24 |
| 2025-03-17 | Buy | 1.37 | 1.22 |
| 2025-02-19 | Sell | 1.05 | 1.29 |
| 2024-11-15 | Sell | 1.10 | 1.39 |
| 2024-08-15 | Sell | 1.10 | 1.41 |
| 2024-05-29 | Sell | 1.15 | 1.37 |
| 2024-05-28 | Sell | 1.15 | 1.35 |
| 2024-03-01 | Neutral | 1.06 | 1.12 |
| 2024-01-18 | Neutral | 1.14 | 1.08 |
| 2023-11-14 | Buy | 1.09 | 0.91 |
| 2023-11-08 | Buy | 1.09 | 0.90 |
| 2023-08-15 | Buy | 0.72 | 0.61 |
| 2023-05-30 | Buy | 0.72 | 0.59 |
| 2023-04-04 | Buy | 0.75 | 0.50 |
| 2023-03-09 | Buy | 0.68 | 0.51 |
Source: RHB, Bloomberg
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
Investment Research Disclaimers
RHB has issued this report for information purposes only. This report is intended for circulation amongst RHB and its affiliates’ clients generally or such persons as may be deemed eligible by RHB to receive this report and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. This report is not intended, and should not under any circumstances be construed as, an offer or a solicitation of an offer to buy or sell the securities referred to herein or any related financial instruments.
DISCLOSURE OF CONFLICTS OF INTEREST
RHB Investment Bank Berhad, its subsidiaries (including its regional offices) and associated companies, (“RHBIB Group”) form a diversified financial group, undertaking various investment banking activities which include, amongst others, underwriting, securities trading, market making and corporate finance advisory.
Malaysia
Save as disclosed in the following link RHB Research Conflict Disclosures Jul 2025 and to the best of our knowledge, RHBIB hereby declares that:
- RHBIB does not have a financial interest in the securities or other capital market products of the subject company(ies) covered in this report.
- RHBIB is not a market maker in the securities or capital market products of the subject company(ies) covered in this report.
- None of RHBIB’s staff or associated person serve as a director or board member* of the subject company(ies) covered in this report. *For the avoidance of doubt, the confirmation is only limited to the staff of research department.
- RHBIB did not receive compensation for investment banking or corporate finance services from the subject company in the past 12 months.
- RHBIB did not receive compensation or benefit (including gift and special cost arrangement e.g. company/issuer-sponsored and paid trip) in relation to the production of this report.
Analyst Certification
The analyst(s) who prepared this report, and their associates hereby, certify that:
- they do not have any financial interest in the securities or other capital market products of the subject companies mentioned in this report, except for:
- no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
| Analyst | Company |
|---|---|
