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PPWSA 1Q24 Review: Robust Revenue Growth leads to 35.6% Net Profit Increase

Equity Report / July 3, 2024

Performance Highlights
FY ends Dec (KHR bn) 1Q24 4Q23 1Q23 %QoQ % YoY
Revenue 105.76 100.92 83.01 4.8% 27.4%
EBITDA 60.00 54.70 42.00 9.6% 42.9%
EBIT 45.20 39.20 26.90 15.3% 68.3%
Finance cost 17.60 0.90 14.90 1869.4% 18.4%
PBT 62.80 40.10 41.70 56.6% 50.5%
Net profit 52.10 35.20 38.40 48.0% 35.6%
EBITDA margin 56.7% 0.54 0.51 2.5%pt 6.1%pt
EBIT margin 42.8% 0.39 0.32 3.9%pt 10.4%pt
Net margin 49.3% 0.35 0.46 14.4%pt 3.0%pt
Source: YSC Research
1Q24 Review: Robust Revenue Growth leads to 35.6% Net Profit Increase Household clients continued to drive water demand growth
  • As of the end of 1Q24, total water subscription reached 485,755 connections, an increase of 5.8% YoY. Household clients made up 79.8% of water subscribers, with 387,600 connections. Additionally, this segment continues to achieve a solid growth of 5.6% YoY, experiencing several quarters of consecutive growth since the pre-covid era. Commercial & industrial clients account for 91,482 connections or 18.8% of total connections, while the remaining 6,673 connections are from members of the government, autonomous state authorities, private water distributors, and other organizations. The number of commercial and industrial clients continued to experience strong growth, increasing by 6,302 connections or 7.4% compared to the end of 1Q23.

  • The overall water demand has continued its upward trend, increasing 28% YoY to 69.2 million cubic meters in 1Q24. The increase can be attributed to the robust demand of at least 25% YoY across all customer segments, with household clients seeing the highest growth (+29.8% YoY).

Top line posted strongest YoY growth since 3Q21
  • Total revenue saw robust growth of 27.4% YoY, reaching KHR105.8bn. With the double-digit YoY growth in demand from all types of customers, core water sales surged 24.8% YoY to KHR94.7bn, equivalent to 89.5% of total revenue. Water sales to household clients grew robustly at 32.7% YoY to reach KHR35.2bn. Meanwhile, water sales to commercial clients rose 27.3% YoY from KHR35.6bn to KHR45.4bn. Finally, water sales to public institutions, autonomous state bodies, wholesalers, and rental rooms saw the largest growth of 65.7% YoY, reaching KHR 3.0bn.

  • Construction services, which represents 2.1% of total revenue, sharply declined 67.8% YoY from KHR6.8bn to KHR2.2bn. On the other hand, other incomes, which include service fees from water meter replacement, sales spare parts, and penalty fees, rose 4x from KHR 2.4bn in 1Q23 to KHR 8.9bn in 1Q24.

EBITDA margin improved by 6.1%pt YoY in 1Q24
  • Operating expenses (including depreciation & amortization) increased moderately by 7.8% YoY from KHR 56.1bn to KHR 60.5bn. The increase in total operating expenses can be attributed mainly to higher costs in electricity (+38.6 YoY), raw materials for water treatment (+25.6% YoY) and water connections (+20.1% YoY), repair and materials (+66.6% YoY), and other operating expenses (+32.3% YoY). Despite the increase in total operating expenses, EBITDA surged 42.9% YoY to KHR 60.0bn with EBITDA margin improving 6.1%pt YoY to 56.7%. As depreciation and amortization expenses decreased 2.3% YoY, EBIT jumped 68.3% YoY to KHR 45.2bn. Therefore, EBIT margin expanded 10.4%pt YoY to 42.8% in 1Q24.

Net profit surged by 35.6% YoY in 1Q24
  • Net finance income increased from KHR 14.9bn to KHR 17.6bn in 1Q24. As a result, net income increased from KHR 38.4bn to KHR 52.1bn, a significant 35.6% increase YoY, leading to a better net income margin of 49.3% (+3.0%pt YoY). This improvement was driven by strong revenue growth and an enhanced EBIT margin.

  • EPS increased from KHR 1,337 in 1Q23 to KHR 1,613 in 1Q24, with PPWSA’s stock trading at a P/E ratio of 4.50x as of end of 1Q24.

Water subscription
Client 1Q24 1Q23 Change %Change 1Q24 % total
Household clients 387,600 366,997 20,603 5.6% 79.8%
Commercial & industrial clients 91,482 85,180 6,302 7.4% 18.8%
Others 6,673 6,732 -59 -0.9% 1.4%
Total 485,755 458,909 26,846 5.8% 100.0%
 
Revenue breakdown
KHR'mn 1Q24 1Q23 Change %Change 1Q24 % total
Water Sales 94,663 73,743 20,921 28.4% 89.5%
Construction Services 2,195 6,825 -4,630 -67.8% 2.1%
Other Incomes 8,903 2,444 6,459 264.3% 8.4%
Total revenue 105,761 83,012 22,749 27.4% 100%
 
Operating expense breakdown
KHR'mn 1Q24 1Q23 Change %Change 1Q24 % total
Depreciation & Amortization 14,765 15,118 -353 -2% 24%
Electricity 12,409 8,953 3,456 39% 20%
Salaries 19,846 18,457 1,389 8% 33%
Raw materials for water treatment 4,245 3,381 864 26% 7%
Raw materials for household water connections 1,390 1,157 233 20% 2%
Repair & maintenance 3,821 2,294 1,527 67% 6%
Construction service expenses 1,826 3,205 -1,378 -43% 3%
Other operating expenses 3,552 2,685 866 32% 6%
Net gain/loss from forex -1,051 891 -1,941 -218% -2%
Total operating expense 60,543 56,141 4,402 8% 100%
 
Financial Ratios
FY end to Dec 2020 2021 2022 2023 1Q24 (ttm)
Per share ratios
EPS (KHR) 1,016 1,486 1,244 1,456 1,613
EPS (KHR, adj.) 1,096 1,412 1,202 1,547 1,602
BPS (KHR) 11,141 13,270 14,489 15,908 16,465
BPS (KHR, exc Class A) 6,644 8,773 9,992 11,412 11,968
EBITDA/shr (KHR) 2,069 2,441 2,172 2,440 2,673
SPS (KHR) 3,730 4,218 3,980 4,460 4,722
DPS (KHR) 262 310 330 350 n/a
Valuation ratios
Share Price 6,100 7,160 7,560 7,280 7,260
P/E (x) 6.00 4.82 6.08 5.00 4.50
P/E* (x, adj. earnings) 5.57 5.07 6.29 4.70 4.53
P/B (x) 0.55 0.54 0.52 0.46 0.44
P/B (x, exc. Class A) 0.92 0.82 0.76 0.64 0.61
EV/EBITDA (x) 5.34 6.02 8.03 8.44 7.89
P/S (x) 1.64 1.70 1.90 1.63 1.54
Dividend yields (%) 4.30 4.33 4.37 5 n/a
Dividend payout (%) 25.79 20.86 26.53 24.04 n/a
Profitability ratios
Gross margin (%) 76.33 78.74 77.77 78.25 78.38
EBITDA margin (%) 55.49 57.87 54.57 54.71 56.60
EBIT margin (%) 39.95 42.82 37.40 38.73 41.60
Net margin (%) 27.24 35.24 31.25 32.64 34.16
ROE (%) 9.32 12.03 8.87 9.50 9.89
ROE(%, exc Class A) 15.87 18.92 13.06 13.44 13.66
ROA (%) 5.09 6.20 4.34 4.33 4.39
Efficiency ratios
Asset turnover (x) 0.19 0.18 0.14 0.13 0.14
Receivables turnover (x) 16.55 14.52 12.02 12.78 8.53
Payable turnover (x) 0.43 0.52 0.52 0.50 0.46
Financial strength
Debt/equity (%) 89.87 97.73 110.98 126.57 123.82
Net debt/equity (%) 43.78 56.20 65.02 84.48 83.41
Interest coverage (x) 7.87 32.76 35.86 42.59 7.36
Inter & ST debt cover (x) 2.74 5.63 4.78 5.43 3.17
Current ratio (x) 1.27 2.09 2.32 2.85 2.79
Quick ratio (x) 0.66 0.96 1.07 0.75 0.80
Net debt/EBITDA (x) 2.39 3.09 4.38 5.55 5.17
Note: *Based on earnings adjusted for forex gain/loss on borrowings; **Excluding Class A (non-voting) shares
June 25, 2024
Closing price KHR 6,980
IPO price KHR 6,300
 
Stock Info
Industry Utility (Water)
Market cap (KHRbn) 607
Outstanding shares (mn) 21
Majority shareholder  
Ministry of Economy & Fin (%) 80
Avg daily vol. (last 6 months, shr) 3,952
Free floating shares (last 6 months, %) 14.68
Price low/high (last 6 months, KHR) 6,960 ~ 7,380
EPS (KHR) (ttm) 1613
P/E (x) (ttm) 4.50
P/E (x) (ttm, adj. earnings) 4.53
P/B (x) (mrq) 0.44
P/B* (x) (mrq) 0.61
EV/EBITDA (x) (ttm) 7.89
D/E (%) (mrq) 123.82
*Based on earnings adjusted for forex gain/loss **Excluding equity of class A (non-voting) shares.
Stock Performance
 
Trading Volume & Value in Last 12 Months
Month-Year Monthly trading Average per day
  Volume (shr) Value (KHR'mn) Volume (shr) Value (KHR'mn)
Jun-24 158,564 1,118 13,214 93.2
May-24 143,648 1,036 7,182 51.8
Apr-24 71,209 505 3,560 25.3
Mar-24 22,214 161 1,111 8.0
Feb-24 30,854 224 1,469 10.7
Jan-24 47,766 345 2,077 15.0
Dec-23 89,953 651 4,283 31.0
Nov-23 35,021 252 1,843 13.3
Oct-23 60,791 437 2,895 20.8
Sep-23 80,537 589 3,835 28.1
Aug-23 43,719 327 1,901 14.2
Jul-23 38,637 288 1,932 14.4
Source: CSX, YSC Research
Earning Strength: EPS (TTM, KHR)
 
Average Water Tariff (KHR)
 
Water Demand (million m3)
 
Quarterly Revenue & Net Profit (KHR'bn)
 
Quarterly Profit Margin (%)
 
Yearly Profit Growth (YoY, %)
 
Condensed Financial Statements Statement of comprehensive income
FY to Dec (KHR'mn) 2020 2021 2022 2023 1Q24
Revenues 324.4 366.9 346.2 387.9 105.8
COGS -76.8 -78.0 -76.9 -84.4 -23.4
Gross profit 247.6 288.9 269.2 303.6 82.3
Operating expenses -64.3 -78.9 -81.4 -95.4 -23.4
Net gain/loss from forex -3.3 2.3 1.1 4.1 1.1
EBITDA 180.0 212.3 188.9 212.2 60.0
Depreciation & Amortization -50.4 -55.2 -59.5 -62.0 -14.8
EBIT 129.6 157.1 129.5 150.3 45.2
Interest income 7.6 13.6 4.7 6.7 19.4
Interest expense -16.5 -4.8 -3.6 -3.5 -1.8
PBT 120.7 165.9 130.5 153.5 62.8
Income tax expense -32.4 -36.6 -22.3 -26.9 -10.7
Profit of the period 88.4 129.3 108.2 126.6 52.1
Actuarial loss on retirement benefit 0.0 0.0 0.0 0.0 0.0
Net income 88.4 129.3 108.2 126.6 52.1
 
Statement of financial position
FY to Dec (KHR'mn) 2020 2021 2022 2023 1Q24
Non-current assets 1,586.7 1,906.4 2,215.1 2,505.9 2,579.2
Property, Plant & Equipment 1,573.6 1,893.9 2,203.0 2,495.4 2,569.2
Intangible assets 13.1 12.5 12.1 10.5 10.0
Other-non current assets 0.0 0.0 0.0 0.0 0.0
Current assets 277.9 400.4 469.0 653.2 648.3
Inventories 78.6 143.7 152.7 318.7 288.6
Trade & other receivables 25.6 24.9 32.7 28.0 47.9
Cash & cash equivalent 99.7 89.7 56.7 15.7 14.9
Short-term investment 18.4 68.2 126.1 127.3 122.0
Other current assets 55.5 74.0 100.7 163.5 174.8
Total assets 1,864.6 2,306.8 2,684.1 3,159.1 3,227.5
Non-current liabilities 663.8 948.9 1,209.6 1,535.9 1,553.0
Long-term debts 517.3 790.4 986.5 1,296.9 1,309.0
Trade & other payables 65.2 69.4 76.8 82.9 84.6
Other non-current liabilities 81.3 89.1 146.3 156.1 159.4
Current liabiliites 218.8 191.3 202.4 229.1 232.5
Short-term debts 30.8 23.1 23.5 24.1 30.7
Trade & other payables 156.6 142.0 154.7 179.9 188.7
Other current liabilities 31.3 26.2 24.2 25.0 13.1
Total liabilities 882.6 1,140.2 1,411.9 1,765.0 1,785.5
Shareholders' equity 982.1 1,166.6 1,272.2 1,394.5 1,442.0
Share capital 541.2 619.3 620.8 620.8 620.8
Capital reserves 352.5 418.0 543.3 647.1 769.2
Retained earnings 88.4 129.3 108.2 126.6 52.1
Total liabilities & equity 1,864.6 2,306.8 2,684.1 3,159.5 3,227.5
Net debt 448.4 723.8 953.3 1,305.4 1,324.8
Total debt 548.1 813.5 1,010.0 1,321.1 1,339.7
 
Statement of cash flows
FY to Dec (KHR'mn) 2020 2021 2022 2023 1Q24
Operating cash flow 68.8 69.3 62.2 -82.7 49.3
Net profit 88.4 129.3 108.2 126.6 62.8
Depreciation & amortization 50.4 55.2 59.5 62.0 14.8
Chg in working capital -75.8 -61.5 -80.1 -202.8 9.9
Others 5.9 -53.7 -25.3 -68.4 -38.2
Investing cash flow -199.3 -342.9 -337.0 -266.0 -82.0
Net CAPEX -195.9 -289.7 -281.6 -269.9 -89.3
ST investment -0.5 -49.7 -58.0 -1.2 5.3
Others -2.9 -3.4 2.5 5.1 2.0
Financing cash flow 175.1 263.5 241.9 308.0 32.0
Net chg in share capital 0.0 78.1 1.4 0.0 0.0
Net chg in debt 202.2 274.6 197.5 320.5 33.7
Cash dividend -26.0 -3.4 -4.0 -4.3 0.0
Others -1.2 -85.7 46.9 -8.2 -1.7
Net change in cash & equivalent 44.5 -10.1 -32.9 -40.6 -0.8
Beginning cash & equivalent 55.2 99.7 89.7 56.7 15.7
Ending cash & equivalent 99.7 89.7 56.7 16.1 14.9
Source: PPWSA, YSC Research

 

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