PETALING JAYA: Taliworks Corp Bhd
may gain from a potential re-rating catalyst from further job wins in its construction arm for water related projects.
Another possible re-rating catalyst would be a quicker-than-expected approval for the tariff hike for its waste management associate company.
RHB Research said the company might gain from Air Selangor’s planned strategic measures to develop four new water treatment plants in Selangor by 2030 to raise the water reserve margin.
Taliworks’ water treatment and supply division recorded a 5.4% year-on-year decrease in earnings before interest and taxes (ebit) in the first quarter.
This is due to Air Selangor’s rationalisation of balancing water intake in the southern region that resulted in the reallocation of surplus water to the northern region of Selangor.
“Its construction arm recorded a lower ebit of RM1mil in the first quarter of financial year 2025 (1Q25) (1Q24: RM0.3mil) driven by better progress for the Sungai Rasau Stage 1’s packages 2 and 3.
This was the largest quarterly ebit recorded over the last five quarters,” the research house said.
“We still expect the Sungai Rasau project to be completed in 2027 and annual progress may significantly pick up in the final year of completion. Therefore, we dial down on our progress billings for the financial year 2025 (FY25) and FY26 but increase it for FY27,” it added.
RHB Research is also imputing a more conservative estimate for the metered sales of water since Air Selangor’s rationalisation of balancing water intake in certain regions might affect this.
The research house maintained its “buy” call on the counter with an increased target price of RM1.01 from 98 sen before and a circa 7% projected FY26 yield.
“Taliworks’ first quarter core profit of RM10.5mil which is a 30% year-on-year fall missed our estimates – making up 12% of our full-year projections.
“The negative deviation was due to lower-than-expected metered sales of water and the construction progress of the Sungai Rasau project,” RHB Research said.
