A key factor for Ranhill’s near-term earnings is the non-revenue water matching grant.
PETALING JAYA: Buoyed by its potable water operations in Johor following the recent tariff hike, Ranhill Utilities Bhd
posted a strong start for its first quarter ended Sept 30 of its financial year 2026 (FY26).
Notably, the expected boost from data-centre (DC) demand has yet to materialise, with actual drawdowns remaining modest at around 18 million litres per day (MLD), according to BIMB Research.
For the quarter ended Sept 30, Ranhill’s profit after tax and minority interests rose 68% quarter-on-quarter (q-o-q) to RM29.9mil, driven primarily by its potable water supply services in Johor.
Revenue increased 16.7% q-o-q to RM589mil, supported mainly by the full pass-through of non-domestic tariff adjustments.
“However, DC contribution to Ranhill’s top line and earnings remains modest despite the DC tariff band being the highest at RM5.33 per cubic metre.
“Actual DC water consumption in Johor is still far below committed volumes, with current draw of only about 18 MLD, which represents less than 5% of total water demand.
“This continues to limit earnings uplift at this stage despite the premium tariff structure,” BIMB Research said in a report.
A key factor for Ranhill’s near-term earnings is the non-revenue water (NRW) matching grant, which the group has received three times under the 12th Malaysia Plan.
“Depending on the verified level of NRW reduction achieved, the reimbursement rate may range between 50% and 75%, which could materially influence reported earnings.
“The RM160mil recognised reflects an assumption of a 75% reimbursement rate.
“While the continuation of the grant programme under the 13th Malaysia Plan remains uncertain, any extension would provide meaningful upside to Ranhill’s earnings beyond the core run-rate driven by tariff uplift.”
In Penang, the state government’s decision to defer the water tariff hike to July 2026 is likely to keep PBA Holdings Bhd’s near-term earnings growth subdued, said the research firm.
PBA posted a weaker third quarter ended Sept 30, with revenue falling 6.7% q-o-q to RM137mil, mainly due to a sharp drop in capital contribution funds from property developers and slightly lower water consumption.
The quarter followed a strong second quarter, highlighting the uneven nature of compounded cash flow inflows, it added.
With Penang yet to implement the higher domestic and non-domestic water tariffs, PBA’s financial boost has been delayed through FY25 and the first half of FY26, it added.
“Nonetheless, the delay does not alter the medium-term structural trajectory, as tariff rationalisation remains a federal priority and should ultimately strengthen PBA’s financial sustainability once implemented in July 2026.”
