KUALA LUMPUR: Ranhill Utilities Bhd's (RUB) 80 per cent-owned water operator subsidiary, Ranhill SAJ Sdn Bhd (RSAJ), recent water tariff hike is timely in easing pressure on earnings caused by higher lease payments and running costs.
RHB Research said RSAJ has recently begun implementing the new water tariffs effective January 1 for non-domestic users. The last water tariff hike took place in 2015.
"The firm's move is in line with the water tariff hikes gazetted by the government for non-domestic users and special categories in West Malaysia and Labuan—effective August 1, 2022.
"Post the tariff hike, we estimate FY23 to post additional billings of RM30 million to RM50 million.
"We also understand RSAJ may recognise differences between old and new tariffs for non-domestic users from August to December 2022.
"As such, it is expected to see additional revenues of RM10 million to RM20 million for this period.
"Having said that, we make no changes to our earnings estimates pending further clarity from RUB," the bank-backed research firm said in a note.
According to RSAJ's corporate website, the increases in water tariffs for non-domestic users range between 20 sen and 30 sen per cubic metre or a six to 10 per cent rise.
RHB Research said the minimum monthly charges for non-domestic users and special segments (which have minimum contributions to RSAJ's total non-domestic billings), such as houses of worship, welfare institutions, and shipping, saw three per cent, 129 per cent, and 40 per cent increases, respectively.
RHB Research has maintained its 'Buy' call on RUB with an unchanged target price of 55 sen.