Moya Holdings Asia, once a relatively unknown small-cap company, catapulted in mid-2017 to become the largest water company in Indonesia after acquiring a concession in Jakarta.

Moya is also the only listed water business in all of Indonesia, the 4th most populous country in the world.

Moya is, accordingly, also the only Indonesian water play on the Singapore Exchange where it is listed.

Its market cap (stock price: 9 cents) is about S$249 million, translating into a PE of about 11X earnings based on an annualised 3Q17 profit of S$5.5 million x 4 = S$22 million. (RHB has a higher 2018 forecast of S$28 million).

Several analysts and NextInsight visited three of Moya's water treatment plants in Jakarta reeently.


canal2.18@ Aetra Air Jakarta water treatment plant: Some water from West Tarum Canal is continuously channeled into an inlet on the right, which takes the water to the water treatment plant nearby. Photo by Ngo Yit Sung
As they patiently navigate the notorious traffic jam in Jakarta, motorists scarcely give rivers (photos) nearby much attention. 

As one of them flows, large volumes of water are diverted into pipes that go under the road and into the water treatment plant of Moya.

paul2.18@ Moya Tengerang water treatment plant: The Cisadane River is controlled by a dam. The plant supplies water to Jakarta city, including 90% of the water reaching its international airport.
Photo by Ngo Yit Sung
This plant is Aetra Air Jakarta (Buaran), which has the capacity to treat 6,000 litres per second.


It is the largest plant in Moya's operations, accounting for about 42% of its entire capacity of 14,000 litres per second.

aeration2.18@ Aetra Air Jakarta water treatment plant: Water from the river cascades down like fountains and is in the process aerated. This increases its oxygen saturation,  removes carbon dioxide, and oxidizes soluble iron and manganese to insoluble precipitates. Photo by Ngo Yit Sung
brown2.18Filter tank undergoing backwash cycle to dislodge the floc from the filter media (sand). Proper backwashing is a very important step in the operation of a filter. 
Photo by Leong Chan Teik
The plant delivers clean water over a 6,200km pipe network to the people of Jakarta.

This plant is one of the assets of Acuatico, which was co-owned by foreign institutional investors (Avenue Luxembourg and Hagerty Investments) who sold out to Moya in June 2017 for US$245.18 million through a competitive bid process involving several bidders.

treatment2.18Intricate piping network which collects and channels treated water from filter tanks to a reservoir for distribution.  Photo by Leong Chan TeikAcuatico, which serves 3 million residents, is a high cashflow business.

When Moya first consolidated Acuatico's financials, ie 3Q17, Moya's operating cashflow was positive S$9.1 m versus negative S$4.9 m in the same quarter of 2016.

But Acuatico's concession operated under PT Aetra Air Jakarta came with a thorny challenge.

It has a high level of  non-revenue water (NRW), which is water that is lost, mainly, through pipe leakage and, to a smaller extent, through theft.



sludge2.18@ Aetra Air Jakarta water treatment plant: Sludge cake is produced as a by-product for use in landfills, etc. Photo by Ngo Yit Sung The NRW is about 43.5%.

In Singapore, the NRW is just below 5%.

Through repairs and replacement of pipes, which would entail significant capex, Moya is seeking to reduce the NRW by about half over the next 6-7 years.

controlroom2.18@ Aetra Air Jakarta: A new high-tech control room. Photo by Leong Chan Teik This would crystallise an opportunity: The bulk of the incremental gross profit from the sale of water that is recovered would flow down to become pre-tax profit.

Positive action by Moya would put it in good standing with the government, enhancing its prospects for clinching new concessions and expanding the production capacity of existing water treatment plants. 
 

 

glass2.18Cheers to clean water! 
Photo by Leong Chan Teik

Moya has big ambitions, which is not surprising considering that:

♦ Moya is 68.9% controlled by the Salim Group, Indonesia's largest conglomerate, which injected cash through a placement of new shares (2015) and a rights issue (2016). 

♦ To enhance its capabilities, Moya entered into a 51-49 JV in Nov 2016 with Maynilad Water Services, the No.1 player in the Philippines. 

visit2.18Photo: Moya The JV will be engaged in pipe network design and installation, NRW management and wastewater management in Indonesia.

Forecasts & Valuation

Dec-16

Dec-17F

Dec-18F

Dec-19F

Total turnover (SGDm)

19

151

258

279

Net profit (SGDm)

3.0

12.5

28.0

32.9

DPS (SGD)

-

-

-

-

Return on average equity (%)

3.2

9.7

18.8

18.3

Source: RHB


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