KUALA LUMPUR (Nov 9): Certain shareholding changes as well as the government’s announcement to increase water tariffs have spurred a rally in Bursa Malaysia's water-related stocks over the past week. 

Natural Resources, Environment, and Climate Change Minister Nik Nazmi Nik Ahmad has recently stated that the ministry is in the process of drafting a cabinet proposal for the introduction of a new mechanism to determine water tariffs, after seeking views from state governments across parties.

Coupled with the entry of YTL Power International Bhd, Ranhill Utilities Bhd's share price surged more than 64% this week to close at 94.5 sen on Thursday that valued it at RM1.23 billion

On Nov 1, YTL Power became the group’s major shareholder with nearly a 19% stake, after acquiring the shares from Cheval Infrastructure Fund.

In a note on Thursday, RHB Research said Ranhill is expected to benefit from the increase in non-domestic water tariffs in Johor from January next year.

It noted that YTL Power is venturing into data centres in Johor, which could spur demand for data centre cooling systems.

“In general, 1MW of data centre capacity may require 25,500 cu m [cubic metres] of water per year. As such, a main potential beneficiary would be Ranhill’s 80%-owned Ranhill SAJ Sdn Bhd, the sole and exclusive provider of source-to-tap water supply in Johor. 

“Note that water consumption from non-domestic users in Johor was 6.3% year-on-year higher in the financial year ended Dec 31, 2022 (FY2022) at 195.7 million cu m, after two years of decline. While the likelihood of YTL Power increasing its stake in Ranhill is hard to ascertain, we think that any potential of it happening in the future should not be ruled out,” the research house said in a note on Thursday while upgrading Ranhill’s target price to RM1.09 from 72 sen previously.

Another water-related stock that has come under the limelight is Salcon Bhd as its share price has jumped over 67% following the emergence of Berjaya Corp Bhd (BCorp) as its third-largest shareholder on Nov 3. 

BCorp subsequently bought a further 8.1 million shares, or a 0.801% stake, on Nov 6, increasing its stake in Salcon to 6.235%. Salcon closed up half a sen or 1.69% at 30 sen on Thursday, giving it a market capitalisation of RM303.72 million.

Currently, Salcon’s largest shareholders are its executive deputy chairman Tan Sri Tee Tiam Lee with a 12.546% stake, followed by non-independent and non-executive director Datin Goh Phaik Lynn with a 10.58% stake. 

PBA Holdings Bhd, meanwhile, climbed 43.2% during the week, from 81 sen to close at RM1.16 on Thursday, despite an 18.4% decline in its net profit to RM36.76 million for the July-September 2023 quarter.

PBA’s principal subsidiary Perbadanan Bekalan Air Pulau Pinang Sdn Bhd serves as the licensed operator for water supply in Penang. 

Kumpulan Perangsang Selangor Bhd’s share price shot up 21% in the past week, closing at 80 sen on Thursday for a market value of RM429.9 million.