PPWSA 1Q23 Review: Core revenue growth continues to be resilient

Equity Report / May 22, 2023

Performance Highlights

FY ends Dec (KHR’bn)1Q234Q221Q22% QoQ% YoY
Finance cost14.87-3.468.65-529.2%71.9%
Net profit38.4122.0930.2973.9%26.8%
EBITDA margin50.6%46.4%pt57.2%pt4.1%pt-6.6%pt
EBIT margin32.4%30.4%pt39.1%pt2.0%pt-6.7%pt
Net margin46.3%23.9%pt36.9%pt22.3%pt9.3%pt
Source: YSC Research

1Q23 Review: Core revenue growth continues to be resilient

Commercial & industrial clients continue to drive water demand growth

  • Water subscriptions increased 4.8% YoY to 458,909 connections at the end of 1Q23. Household clients make up the vast majority of water subscribers, with 366,997 connections, or 80.0% of the total connections. Commercial and industrial clients account for 85,180 connections or 18.6% of the total, while the remaining 6,732 connections are from members of the government, autonomous state authorities, private water distributors, and other organizations. The number of commercial and industrial clients continued to experience strong growth, increasing by 7,070 connections or 9.1% YoY from the end of 1Q22. In comparison, the number of household clients increased only by 4.0% during the same period.

Top line remains stable despite solid growth in core water sales

  • Total revenue went up slightly by 1.2% YoY to KHR83bn in 1Q23, but down 10.0% QoQ. Even though the average water tariff dropped 1% compared to 1Q22, core water sales continue to rise 6.7% YoY to KHR73.7bn, or 88.8% of total revenue. Water sales to commercial and industrial clients saw the biggest growth of 10.8% YoY to almost KHR35.6bn in 1Q23, as water consumption from them continues to surge. On the other hand, water sales to household clients remained almost unchanged with only a 0.4% increase from KHR26.4bn in 1Q22 to KHR26.5bn in 1Q23. Meanwhile, water sales to public institutions & autonomous state bodies, wholesalers & rental rooms dropped by 13.0% YoY as the average water tariff for them decreased 25% from KHR1,443 in 1Q22 to KHR1,080.

Rising costs of raw materials and salaries squeeze operating profit margin by 6.7%pt YoY

  • In 1Q23, EBITDA came to KHR42.0bn, down 2.0% QoQ, and 10.5% YoY. Operating expenses (excluding depreciation & amortization) increased 16.9% YoY to KHR56.1bn, driven mainly by a 15.0% YoY increase in salaries, and a 21.5% YoY increase in raw materials for water treatment and household connection. This led to a squeeze in EBITDA margin by 6.%pt YoY to 50.6%. With depreciation and amortization expenses edging up 1.6% YoY, EBIT fell 16.1% YoY to KHR26.9bn. As a result, EBIT margin narrowed 6.7%pt YoY to 32.4% in 1Q23.

Net profit surges 26.8% YoY to KHR38.4bn in 1Q23 on unrealized forex gain

  • Net finance income increased from KHR8.7bn in 1Q22 to KHR14.9bn in 1Q23. The net unrealized foreign exchange gain on borrowings came to KHR14.1bn, up from KHR8.6bn in 1Q22, leading to an increase in the net finance income. This was mainly the result of KHR appreciation against USD as most of PPWSA’s loans were made in the foreign currency, while its base currency for accounting record is KHR. Consequently, net profit climbed 26.8% to KHR38.4bn with net margin improving by 9.3%pt YoY to 46.3%.

Water subscription

Client1Q231Q22Change%Change1Q23 % total
Household clients366,997353,02013,9774.0%80.0%
Commercial & industrial clients85,18078,1107,0709.1%18.6%

Revenue breakdown

KHR'mn1Q231Q22Change %Change1Q23 % total
Water Sales73,74369,1324,6106.7%88.8%
Construction Services6,8253,8173,00978.8%8.2%
Other Incomes2,4449,071-6,627-73.1%2.9%
Total revenue83,01282,0209921.2%100%

Operating expense breakdown

KHR'mn1Q231Q22Change %Change1Q23 % total
Depreciation & Amortization15,11814,8792392%27%
Raw materials for water treatment3,3812,58080131%6%
Raw materials for household water connections1,1571,15430%2%
Repair & maintenance2,2941,35993469%4%
Construction service expenses3,2051,9911,21461%6%
Other operating expenses2,6852,31636916%5%
Net gain/loss from forex8911,127-236-21%2%
Total operating expense56,14149,9846,15712%100%

Financial Ratios

FY end to Dec20192020202120221Q23 (ttm)
Per share ratios
EPS (KHR)3831,0161,4861,2441,337
EPS (KHR, adj.)3901,0961,4121,2021,381
BPS (KHR)10,35111,14113,27014,48914,885
BPS (KHR, exc Class A)5,8556,6448,7739,99210,388
EBITDA/shr (KHR)1,1692,0692,4412,1192,063
SPS (KHR)2,4723,7304,2183,9803,992
DPS (KHR)230262310n/an/a
Valuation ratios
Share Price6,0006,1007,1607,5607,560
P/E (x)15.676.004.826.085.65
P/E* (x, adj. earnings)15.385.575.076.295.47
P/B (x)0.580.550.540.520.51
P/B (x, exc. Class A)1.020.920.820.760.73
EV/EBITDA (x)7.735.346.028.038.41
P/S (x)2.431.641.701.901.89
Dividend yields (%)3.834.304.33n/an/a
Dividend payout (%)60.0925.7920.86n/an/a
Profitability ratios
Gross margin (%)74.2176.3378.7477.7776.86
EBITDA margin (%)47.2855.4957.8753.2551.68
EBIT margin (%)24.1739.9542.8236.0734.48
Net margin (%)15.4827.2435.2431.2533.50
ROE (%)3.679.3212.038.879.02
ROE(%, exc Class A)6.4615.8718.9213.0612.95
ROA (%)
Efficiency ratios
Asset turnover (x)
Receivables turnover (x)13.4316.5514.5213.033.85
Payable turnover (x)0.400.430.520.520.37
Financial strength
Debt/equity (%)75.5989.8797.73110.98110.82
Net debt/equity (%)28.8943.7856.2064.6765.21
Interest coverage (x)4.527.8732.7610.324.91
Inter & ST debt cover (x)1.162.745.633.512.52
Current ratio (x)0.901.272.092.321.98
Quick ratio (x)0.360.660.961.070.95
Net debt/EBITDA (x)2.602.393.094.464.75
Note: *Based on earnings adjusted for forex gain/loss on borrowings; **Excluding Class A (non-voting) shares

May 17, 2023

Closing price KHR 7,700
IPO priceKHR 6,300

Stock info

IndustryUtility (Water)
Market cap (KHRbn)670
Outstanding shares (mn)21
Majority shareholder
Ministry of Economy & Fin (%)80
Avg daily vol. (last 6 months, shr)3428.11
Free floating shares (last 6 months, %)11.12
Price low/high (last 6 months, KHR) 7,300 ~ 8,060
EPS (KHR) (ttm)1337
P/E (x) (ttm)5.79
P/E (x) (ttm, adj. earnings)5.60
P/B (x) (mrq)0.52
P/B* (x) (mrq)0.75
EV/EBITDA (x) (ttm)3.75
D/E (%) (mrq)110.82
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)

Quarterly revenue & net profit (KHR'bn)

Quarterly profit margin (%)

Quarterly profit growth (%)

Condensed Financial Statements

Statement of comprehensive income

FY to Dec (KHR'mn)20192020202120221Q23
Gross profit159.6247.6288.9269.264.0
Operating expenses-59.4-64.3-78.9-81.4-21.1
Net gain/loss from forex1.5-3.32.3-3.5-0.9
Depreciation & Amortization-49.7-50.4-55.2-59.5-15.1
Interest income8.87.613.617.716.0
Interest expense-11.5-16.5-4.8-12.1-1.2
Income tax expense-16.0-32.4-36.6-22.3-3.3
Profit of the period33.388.4129.3108.238.4
Actuarial loss on retirement benefit0.
Net income33.388.4129.3108.238.4

Statement of financial position

FY to Dec (KHR'mn)20192020202120221Q23
Non-current assets1,387.41,586.71,906.42,215.12,305.5
Property, Plant & Equipment1,374.01,573.61,893.92,203.02,293.7
Intangible assets13.413.112.512.111.8
Other-non current assets0.
Current assets216.9277.9400.4469.0448.5
Trade & other receivables13.625.624.928.348.4
Cash & cash equivalent55.299.789.761.242.3
Short-term investment17.918.468.2126.1125.4
Other current assets26.555.574.0100.7101.2
Total assets1,604.31,864.62,306.82,684.12,754.0
Non-current liabilities449.8663.8948.91,209.61,220.8
Long-term debts303.9517.3790.4986.5996.3
Trade & other payables65.465.269.476.878.8
Other non-current liabilities80.581.389.1146.3145.8
Current liabiliites240.8218.8191.3202.4226.9
Short-term debts33.130.823.123.523.2
Trade & other payables196.7156.6142.0154.7193.4
Other current liabilities11.031.326.224.210.3
Total liabilities690.6882.61,140.21,411.91,447.7
Shareholders' equity913.7982.11,166.61,272.21,306.3
Share capital541.2541.2619.3620.8620.8
Capital reserves339.2352.5418.0543.3647.1
Retained earnings33.388.4129.3108.238.4
Total liabilities & equity1,604.31,864.62,306.82,684.12,754.0
Net debt281.9448.4723.8948.8977.2
Total debt337.1548.1813.51,010.01,019.4

Statement of cash flows

FY to Dec (KHR'mn)20192020202120221Q23
Operating cash flow224.768.869.372.261.7
Net profit33.388.4129.3108.241.7
Depreciation & amortization49.750.455.259.515.1
Chg in working capital99.6-75.8-61.5-75.636.4
Investing cash flow-186.0-199.3-342.9-288.1-101.6
Net CAPEX-200.1-195.9-289.7-281.6-101.0
ST investment15.7-0.5-49.7-58.00.7
Financing cash flow3.1175.1263.5187.421.1
Net chg in share capital0.
Net chg in debt10.7202.2274.6197.522.6
Cash dividend-2.8-26.0-3.4-4.00.0
Net change in cash & equivalent41.944.5-10.1-28.5-18.9
Beginning cash & equivalent13.455.299.789.761.2
Ending cash & equivalent55.299.789.761.242.3
Source: PPWSA, YSC Research

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