PETALING JAYA: Ranhill Utilities Bhd
’s earnings momentum is expected to remain supported by new tariff adjustments, plans to own water assets and Johor’s continued development of data centres.
BIMB Securities Research said Ranhill SAJ Sdn Bhd, a subsidiary of Ranhill Utilities, is nearing the end of its sixth operating period (OP6), which runs until Dec 31, 2026, and has submitted its OP7 business plan to the National Water Services Commission (SPAN). Approval is expected by November 2026.
“Management continues to guide for the next tariff adjustment around January 2029, broadly in line with our expectations, with a typical revision of 10% to 15% subject to cost pressures and regulatory approval.
“Recall that the last August 2025 tariff hike followed the February 2024 revision and formed part of the most extensive tariff restructuring in decades,” the research house said in a report yesterday.
BIMB Research said its recent management meeting provided greater clarity on the group’s regulatory outlook, future tariff trajectory and capacity expansion plans to support Johor’s accelerating industrial growth.
It added that management expects Ranhill SAJ to qualify for the 2025 non-revenue water grant cycle, although the verification and payment process typically takes around 18 months.
Ranhill SAJ had previously secured grants under the 12th Malaysia Plan for 2021, 2023 and 2024, with approximately RM160mil recognised as other income for the 2024 cycle.
“Future grants may be recognised more gradually once eligibility is confirmed, rather than recognising the full amount as a sizeable lump sum, reducing earnings volatility,” the research house said in a report yesterday.
BIMB Research said Johor’s rapid industrialisation and continued development of data centres are expected to drive a substantial increase in treated water demand.
Incremental demand could reach approximately 300 million litres per day by 2029.
At present, Johor’s water assets are owned by Pengurusan Aset Air Bhd (PAAB), a company under the Minister of Finance Inc, while Ranhill SAJ operates and maintains the infrastructure.
However, Ranhill SAJ is now exploring the ownership of selected water assets, after having received approval from SPAN, to accelerate capacity expansion where PAAB funding is insufficient.
“Ranhill SAJ is evaluating new treatment capacity, rezoning, water transfers, smaller facilities and selected own-funded capital expenditure.
“Management is also working with SPAN on minimum take-or-pay arrangements, developer contributions and formal demand commitments to reduce the risk of overbuilding capacity.
“The framework remains under review, with further clarity expected alongside the OP7 approval,” the research house said.
That said, BIMB Research maintained its “hold” call on Ranhill with an unchanged target price of RM1.94.
It said while its recent meeting with the management supports its positive long-term view on the group’s regulated water business, it believes these positives are largely reflected in the current valuation.
“Key catalysts to watch include SPAN’s approval of the OP7 business plan and the timing of the next tariff review, currently guided around 2029,” the research house said.
