PPWSA 2022 Review: Bottom line declines despite solid growth of water sales

Equity Report / May 18, 2023

Performance Highlights

FY ends Dec (KHRÕbn)4Q22% QoQ% YoY2022% YoY
Finance cost-3.46-27.7%-35.7%5.63-35.7%
Net profit22.09-21.1%0.6%108.19-16.3%
EBITDA margin46.4%-21.5%pt-20.9%pt53.2%-4.6%pt
EBIT margin30.4%-29.4%pt-28.8%pt36.1%-6.7%pt
Net margin23.9%-21.7%pt-21.1%pt31.3%-4.0%pt
Source: YSC Research

PPWSA 2022 Review: Bottom line declines despite solid growth of water sales

Commercial and industrial subscriptions see the biggest YoY growth since 2016

  • At the end of 2022, there were 451,554 connections, a rise of 4.7% from the end of 2021. Household customers make up 360,948 connections, or 79.9%, of the total subscriptions, while commercial and industrial customers make up 83,874 connections or 18.6%, and the remaining 6,732 connections are subscriptions from governmental organizations, autonomous state authorities, private water distributors, and other sources. Commercial and industrial client counts increased significantly over the previous year by 9,530 connections, or 12.8% YoY, the highest YoY growth rate since 2016. Comparatively, throughout the same period, the number of household clients increased only 3.0% YoY.

Top line decreases on declining other income, but core water sales continue solid growth

  • Total revenue declined 5.6% to KHR346bn in 2022 from KHR367bn in 2021. Core water sales rose 6.1% YoY to KHR300bn, representing 87% of total revenue. Core water sales, which account for 87% of total revenue, increased 6.1% YoY to KHR300 billion, driven by a 7.7% increase in total water consumption, and a 0.25% increase in average water tariff. Water sales to commercial and industrial clients saw the biggest growth of 18.1% YoY to almost KHR152bn in 2022, as water consumption from them surged 14.2% from 74 million cubic meters to 84.8 million cubic meters. However, water sales to household clients edged down 1.3% from KHR112bn in 2021 to KHR111bn in 2022 despite consumption from households increasing 3.5% during the period, due to the average water tariff for households dropping 4.6% from KHR1,038 to KHR990 per cubic meter.

Operating profit margin declined to the lowest since the pandemic

  • In 2022, EBITDA plummeted 13.2% YoY to KHR184 billion, and EBITDA margin dropped 4.6%pt YoY to 53.2%. Despite the decrease in total revenue, operating expenses (excluding depreciation & amortization) increased 4.7% to KHR161bn, driven mainly by 10.3% increase in salary, and 34.5% increase in the cost of raw materials. Meanwhile, construction service costs fell 26% due to the decline in the construction service activities.

Bottom line posted a 16% decline YoY

  • Net finance income decreased from KHR8.76bn in 2021 to KHR5.63bn in 2022. The net foreign exchange gain on borrowings came to KHR4.59 billion, down from KHR8.09bn in 2021, leading to the decrease in the net finance income. Consequently, pre-tax earnings fell 21.3% YoY to KHR130bn in 2022, while net profit plummeted 16.3% to KHR108 billion with net margin decreasing by 4.0%pt YoY to 31.3%.

Water subscription

Client20222021Change%Change2022 %total
Household clients360,948350,46310,4853.0%79.9%
Commercial & industrial clients83,87474,3449,53012.8%18.6%

Revenue breakdown

KHR'mn20222021Change %Change2022 % total
Water Sales299,724282,37017,3546.1%86.6%
Construction Services24,97626,242-1,266-4.8%7.2%
Other Incomes21,47858,259-36,781-63.1%6.2%
Total revenue346,178366,871-20,693-5.6%100%

Operating expense breakdown

KHR'mn20222021Change %Change2022 % total
Depreciation & Amortization59,45555,1944,2618%27%
Raw materials for water treatment12,1419,5422,59927%5%
Raw materials for household water connections4,9533,1641,79057%2%
Repair & maintenance8,0097,05195914%4%
Construction service expenses16,61822,448-5,830-26%8%
Other operating expenses11,24315,227-3,983-26%5%
Net gain/loss from forex3,481-2,2745,755-253%2%
Total operating expense221,295209,77511,5205%100%

Financial Ratios

FY end to Dec20182019202020212022
Per share ratios
EPS (KHR)8803831,0161,4861,244
EPS (KHR, adj.)8083901,0961,4121,202
BPS (KHR)10,17610,35111,14113,27014,489
BPS (KHR, exc Class A)5,6795,8556,6448,7739,992
EBITDA/shr (KHR)1,5861,1692,0692,4412,119
SPS (KHR)3,0482,4723,7304,2183,980
DPS (KHR)218230262310n/a
Valuation ratios
Share Price4,2006,0006,1007,1607,560
P/E (x)4.7715.676.004.826.08
P/E* (x, adj. earnings)5.2015.385.575.076.29
P/B (x)0.410.580.550.540.52
P/B (x, exc. Class A)0.741.020.920.820.76
EV/EBITDA (x)4.687.735.346.028.03
P/S (x)1.382.431.641.701.90
Dividend yields (%)5.183.834.304n/a
Dividend payout (%)25.7160.0925.7920.86n/a
Profitability ratios
Gross margin (%)75.9174.2176.3378.7477.77
EBITDA margin (%)52.0347.2855.4957.8753.25
EBIT margin (%)35.7924.1739.9542.8236.07
Net margin (%)28.8615.4827.2435.2431.25
ROE (%)8.803.679.3212.038.87
ROE(%, exc Class A)16.006.4615.8718.9213.06
ROA (%)5.442.
Efficiency ratios
Asset turnover (x)
Receivables turnover (x)8.3813.4316.5514.5213.03
Payable turnover (x)0.960.400.430.520.52
Financial strength
Debt/equity (%)61.1675.5989.8797.73110.98
Net debt/equity (%)31.2228.8943.7856.2064.67
Interest coverage (x)5.864.527.8732.7610.32
Inter & ST debt cover (x)1.631.162.745.633.51
Current ratio (x)1.580.901.272.092.32
Quick ratio (x)0.470.360.660.961.07
Net debt/EBITDA (x)2.042.602.393.094.46
Note: *Based on earnings adjusted for forex gain/loss on borrowings; **Excluding Class A (non-voting) shares

Apr 3, 2023

Closing price KHR 7,780
IPO priceKHR 6,300

Stock info

IndustryUtility (Water)
Market cap (KHRbn)658
Outstanding shares (mn)87
Majority shareholder
Ministry of Economy & Fin (%)85
Avg daily vol. (last 6 months, shr)3,345
Free floating shares (last 6 months, %)11.12
Price low/high (last 6 months, KHR) 7,280 ~ 8,060
EPS (KHR) (ttm)1244
P/E (x) (ttm)6.08
P/E (x) (ttm, adj. earnings)6.29
P/B (x) (mrq)0.52
P/B* (x) (mrq)0.76
EV/EBITDA (x) (ttm)8.03
D/E (%) (mrq)111.00
Note: ttm = trailing twelve months (2Q19~1Q23); mrq = most recent quarter (1Q23); *Excluding equity of Class C (non-voting) shares.

Stock Performance

Trading volume & value in last 12 months

Month-YearMonthly tradingAverage per day
Volume (shr)Value (KHR'mn)Volume (shr)Value (KHR'mn)
Source: CSX, YSC Research

Earning strength: EPS (TTM, KHR)

Average water tariff (KHR)

Water demand (million m3)

Annual revenue & net profit (KHR'bn)

Annual profit margin (%)

Annual profit growth (%)

Condensed Financial Statements

Statement of comprehensive income

FY to Dec (KHR'mn)20182019202020212022
Gross profit201.2159.6247.6288.9269.2
Operating expenses-62.3-59.4-64.3-78.9-81.4
Net gain/loss from forex-0.91.5-3.32.3-3.5
Depreciation & Amortization-43.1-49.7-50.4-55.2-59.5
Interest income16.88.87.613.617.7
Interest expense-16.2-11.5-16.5-4.8-12.1
Income tax expense-19.0-16.0-32.4-36.6-22.3
Profit of the period76.533.388.4129.3108.2
Actuarial loss on retirement benefit-
Net income73.633.388.4129.3108.2

Statement of financial position

FY to Dec (KHR'mn)20182019202020212022
Non-current assets1,230.01,387.41,586.71,906.42,215.1
Property, Plant & Equipment1,215.71,374.01,573.61,893.92,203.0
Intangible assets14.313.413.112.512.1
Other-non current assets0.
Current assets219.4216.9277.9400.4469.0
Trade & other receivables18.513.625.624.928.3
Cash & cash equivalent13.455.299.789.761.2
Short-term investment33.617.918.468.2126.1
Other current assets56.926.555.574.0100.7
Total assets1,449.41,604.31,864.62,306.82,684.1
Non-current liabilities411.2449.8663.8948.91,209.6
Long-term debts285.6303.9517.3790.4986.5
Trade & other payables56.865.465.269.476.8
Other non-current liabilities68.780.581.389.1146.3
Current liabiliites138.9240.8218.8191.3202.4
Short-term debts42.133.130.823.123.5
Trade & other payables82.3196.7156.6142.0154.7
Other current liabilities14.511.031.326.224.2
Total liabilities550.1690.6882.61,140.21,411.9
Shareholders' equity899.3913.7982.11,166.61,272.2
Share capital541.2541.2541.2619.3620.8
Capital reserves284.5339.2352.5418.0543.3
Retained earnings73.633.388.4129.3108.2
Total liabilities & equity1,449.41,604.31,864.62,306.82,684.1
Net debt314.4281.9448.4723.8948.8
Total debt327.8337.1548.1813.51,010.0

Statement of cash flows

FY to Dec (KHR'mn)20182019202020212022
Operating cash flow83.1224.768.869.372.2
Net profit76.533.388.4129.3108.2
Depreciation & amortization43.149.750.455.259.5
Chg in working capital26.799.6-75.8-61.5-75.6
Investing cash flow-98.8-186.0-199.3-342.9-288.1
Net CAPEX-161.8-200.1-195.9-289.7-281.6
ST investment63.115.7-0.5-49.7-58.0
Financing cash flow13.13.1175.1263.5187.4
Net chg in share capital0.
Net chg in debt27.610.7202.2274.6197.5
Cash dividend-6.5-2.8-26.0-3.4-4.0
Net change in cash & equivalent-2.641.944.5-10.1-28.5
Beginning cash & equivalent16.013.455.299.789.7
Ending cash & equivalent13.455.299.789.761.2
Source: PPWSA, YSC Research

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