KUALA LUMPUR (Dec 28): Ranhill Holdings Bhd is confident that its subsidiary SAJ Ranhill Sdn Bhd will continue to deliver a strong performance in the years to come, said its president and chief executive Tan Sri Hamdan Mohamad.
SAJ currently accounts for 77% of Ranhill's total revenue, and it has been the sole provider of water supply services to Johor.
On Dec 22, Ranhill had announced that SAJ had renewed its licence as the exclusive water services operator for the state of Johor for a three-year period commencing Jan 1, 2018 till Dec 31, 2020.
The approval was granted following a performance review, in compliance with Section 17 of the Water Service Industry Act 2006 and Section 7 of the Water Service Industry (Licensing) Regulation 2007.
In a statement today, Ranhill said the renewal is expected to contribute to the group's short- and long-term growth.
"This renewal certainly bodes well for Ranhill, as SAJ remains a key source of revenue for the group. Since we commenced operations nearly 20 years ago, SAJ has grown from strength to strength despite early challenges, and we take pride in our ability to meet the stringent key performance indicator (KPI) requirements by the National Water Services Commission (SPAN)," said Hamdan.
"Having invested over RM1.6 billion in SAJ during the early years, the group is committed to continue growing and strengthening our presence to supply water services in Johor.
"Moving forward, we expect to see rapid and sustained growth in Johor on the back of an annual increase in water consumption by 3.7% from new housing developments, rapid industrialisation and increased commercial activities," he added.
For the nine months ended Sept 30, 2017, Ranhill's net profit fell 5.8% to RM55.4 million from RM58.82 million a year ago, while revenue rose 2.9% to RM1.1 billion from RM1.07 billion.
Ranhill said SAJ operates and maintains a combined production capacity of 1,986 million litre per day (mld). It has reduced the state's non-revenue water — which stood at over 40% in 1999 — to 24.7% at end June 2017, with physical loss of only 15.4 cu m per km of pipe per day.
"SAJ's operation cost of RM498,312 per 1,000 account up to November 2017 is well within the KPI target set by SPAN," it added.
Ranhill noted that water and industrial wastewater treatment continues to be a core engine of growth for the group, with concessions in Malaysia, China and Thailand bringing in a steady revenue stream.
The group has a total of 17 water and wastewater concessions on build-operate-transfer, takeover-operate-transfer and built-transfer-operate basis with an aggregate treatment capacity of 290 mld and 102 mld in China (40%-owned subsidiary) and Thailand (wholly-owned subsidiary) respectively.
In China, existing key wastewater treatment concessions have been identified for expansion, including the Xiaolan plant (from 80 mld to 150 mld), Yihuan plant (from 5 mld to 15 mld), and Wanzai plant (from 5 mld to 12.5 mld).
Meanwhile, the Chongren and Yong Xin wastewater treatment plants have been earmarked for further upgrades to meet strict regulator standards.
"New projects in the pipeline also look to be progressing well, including the 10 mld Yong Feng wastewater treatment plant scheduled for completion in mid-2018, as well as ongoing negotiations to secure a new wastewater treatment concession in Fenxin for a 20 mld plant," said Ranhill.
The group said it is now looking to extend its reach not only within Thailand, but also in the surrounding Indo-Chinese nations.
"In addition to our local operations, we are equally focused on growing our international operations. With these expansion plans in place and on track, the group strongly believes that we are well-positioned to achieve further growth around the region," said Hamdan.
At 3.36pm, Ranhill shares were up 1.5 sen or 2.17% at 70.5 sen, with 302,100 shares done, bringing a market capitalisation of RM608.5 million.