KUALA LUMPUR (Aug 20): Ranhill Utilities Bhd (KL:RANHILL) fell nearly 16% on Thursday as investors reacted to the water-and-power firm's latest results amid analyst downgrades.
At least two research houses cut their recommendations for Ranhill, turning the consensus neutral on the stock. Ranhill is now trading at 30 times its forward earnings, a substantial premium to its historical valuations and its peer average, BIMB Securities said in downgrading the stock to ‘sell’.
“We view current valuations as demanding given our expectations” for earnings to decline 28% in the new financial year ending June 30, 2027 as water margins decline from elevated levels, the house said.
Shares of Ranhill lost as much as 44 sen to RM2.33, erasing one week’s gain. The sharp decline also triggered a suspension in its intra-day short-selling, which happens automatically when a stock falls more than 15 sen or 15% from its reference price.
The counter ended the day at RM2.63, down 14 sen or 5%, after some 19 million shares changed hands. At the closing price, the company was valued at RM3.41 billion.
Year to date, the stock is still up 54.7%, amid optimism over rising water demand in Johor driven by the mushrooming of data centres.
There are currently two "buy", two "hold" and one "sell" calls with an average target price of RM2.90 from research houses covering the stock.
MBSB Research lowered the stock to ‘hold’ due to its limited upside. “While we remain positive on longer-term earnings prospects underpinned by rising water demand, we believe much of these positives have increasingly been reflected in the share price,” the house said.
Maybank Investment Bank said it was also disappointed that no dividend was declared by Ranhill and kept its ‘hold’ call following a recent share price gain.
On Wednesday, Ranhill announced a net profit of RM70.08 million for the fourth quarter ended June 30, 2026, bringing the total to RM196.61 million for the full year.
There was no comparison with the preceding year and the previous corresponding quarter as the company changed its financial year-end from Dec 31.