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New Straits Times
04-08-2025
- Business
- New Straits Times
Ranhill Utilities target price raised to RM1.70 on tariff hike, data centre prospects
KUALA LUMPUR: RHB Research has reaffirmed its BUY recommendation on Ranhill Utilities Bhd, raising its target price (TP) to RM1.70 from RM1.37, implying a 26 per cent upside. The upgrade reflects improved earnings visibility following a water tariff hike in Johor and strong growth momentum from the state's booming data centre sector, the firm said. RHB added that, backed by favourable regulatory changes, structural tailwinds in Johor's digital infrastructure push, and its strong execution track record, Ranhill Utilities remains a compelling long-term infrastructure player. In a recent note, the research house said Ranhill stands to benefit from a combination of factors—new tariffs, rising demand from data centres, and the government's planned infrastructure push—positioning the group for multi-year growth. It noted that the stock offers a modest 1 per cent dividend yield for the financial year ending June 2026 (FY26), with further upside potential from future contract wins. The revision follows the announcement of a new water tariff structure by Ranhill SAJ (RSAJ)—Ranhill's 80 per cent-owned water subsidiary—effective 1 August 2025. The revision includes a new tariff category for data centres, aimed at supporting key infrastructure projects such as the Layang 2 Phase 2 (160 million litres per day—MLD), Semanggar (50 MLD), and Semanggar 3 (120 MLD). RSAJ's tariff adjustments cover all user categories. For residential Band 3 and domestic bulk users, water rates are up by 8–11 per cent, or 20 to 35 sen per cubic metre (cu m). Non-domestic users will see increases of 3 to 51 per cent, with Band 2 users facing the steepest jump—from RM3.50/cu m to RM5.30/cu m. A new pricing band for data centres has also been introduced at RM5.33/cu m, slightly higher than non-domestic Band 2 rates but still below Singapore's equivalent industrial rate of about RM5.80/cu m (inclusive of waterborne tax). RHB Research estimates the revised tariffs will raise RSAJ's blended average tariff from RM2.56 to RM2.88/cu m in FY26F, reflecting an 11-month contribution. A full-year impact in FY27 is expected to lift tariffs further to RM3.14/cu m. These changes prompted upward revisions to Ranhill's earnings forecasts, with FY26 and FY27 net profit estimates raised by 15.3 per cent and 23.4 per cent, respectively. Additionally, the research house has revised its long-term water consumption growth assumption to 4 per cent from 3.5 per cent beginning in FY30, driven by growing demand from data centres and the Johor-Singapore Special Economic Zone (JS-SEZ). According to DC Byte's July 2025 Market Spotlight Report, Johor currently has 487 MW of live data centre IT capacity, with another 324 MW under construction and 1,473 MW in committed capacity. RHB projects 300 MW of new data centre capacity to go online annually for the next six years. As a result, data centres are expected to account for 8–15 per cent of RSAJ's non-domestic water consumption over the next three years. Apart from tariff-linked gains, Ranhill is also expected to benefit from the government's National Non-Revenue Water (NRW) Programme, which has an RM2.5 billion allocation under the 12th Malaysia Plan (2025–2030). Ranhill Technologies, the group's consultancy arm, previously secured a RM61.5 million contract in Kelantan in March 2022 to replace 103 km of ageing pipes and is well-positioned for similar projects under the NRW initiative. Although no new jobs have been secured by the services division in FY24 so far, RHB believes the nationwide rollout of NRW-related works could reignite the group's project pipeline. RHB's revised TP of RM1.70 is based on a sum-of-parts (SOP) valuation and includes a 4 per cent ESG premium, reflecting Ranhill's alignment with sustainability objectives. However, the research house cautions that a slowdown in water consumption, particularly from industrial or residential segments, remains a key downside risk to its forecasts.
The Sun
02-08-2025
- Business
- The Sun
Johor water tariff hike exempts most domestic users, says Ranhill SAJ
JOHOR BAHRU: The recent water tariff adjustment in Johor will not affect the majority of domestic consumers, places of worship, or vulnerable groups under the e-Kasih database, said state water operator Ranhill SAJ. Its chief executive officer, Anuar Abdul Ghani, said those in usage tiers one and two will continue enjoying the existing rates, with the adjustment applying only to high-usage domestic consumers in tier three and non-domestic users. 'For domestic users consuming more than 35 cubic metres per month, the rate has been adjusted by 35 sen per cubic metre, but the minimum monthly charge remains at RM10.50,' he said in a statement today. Non-domestic users will see a tariff increase ranging from RM1 to RM1.75 per cubic metre, with the new minimum charge set at RM41.50 monthly. Anuar said residents in strata housing using bulk metres will experience an increase of 20 sen per cubic metre, while the shipping industry will now be charged RM8.03 per cubic metre. A new tariff category has also been introduced for data centres, which will be charged RM5.33 per cubic metre. He said the adjustments, gazetted and effective from Aug 1, were approved by the Cabinet as a necessary step to improve water services and infrastructure resilience. The changes would help fund the replacement of aging, leak-prone pipelines and support rising water demand due to rapid development and population growth, he added. Among the key upgrade projects supported by the new tariff are Layang 2 Phase 2 (160 million litres per day), Semanggar (50 MLD), and Semanggar 3 (120 MLD). 'This is an investment for the future of Johor's water supply. It ensures sustainable, modern infrastructure that meets long-term needs,' Anuar added. - Bernama
The Star
02-08-2025
- Business
- The Star
Johor's water tariff adjustment: Data centres would have to pay more
JOHOR BARU: The water tariff adjustment gazetted by the Cabinet will result in data centres being charged more for the first time, says Ranhill SAJ. The chief executive officer of the water utility company, Anuar Abdul Ghani, said the new rates, which took effect on Friday (Aug 1), apply only to certain users and were meant to strengthen the quality and resilience of the state's water supply system. 'The government set RM5.33 per cubic metre rate specifically for data centres, a fast-growing sector in Johor known for its high water consumption,' he said in a statement on Saturday (Aug 2). On June 11, the Investment, Trade and Industry Ministry reportedly said that Johor was expected to host 60% of Malaysia's total data centre capacity by 2030. It was also reported that there are about 40 to 50 data centre projects in the pipeline in Johor, with 20 of them already approved. Meanwhile, Anuar said that the new tariff would not impact most domestic accounts and low-income consumers. 'The adjustment affects tier three domestic users – those consuming more than 35 cubic metres of water per month – as well as non-domestic categories. 'Tier one and tier two users, who make up most domestic accounts in Johor, will continue to enjoy the existing water tariff rates,' said Anuar. He also assured that places of worship and vulnerable groups registered under the e-Kasih programme are not affected by the new rates. He added that the minimum charge in Johor remains at RM10.50, while consumption exceeding 35 cubic metres per month would incur an additional 35 sen per cubic metre. Bulk meter users in strata housing will see an increase of 20 sen per cubic metre. 'For non-domestic users, the adjustment ranges between RM1 and RM1.75 per cubic metre, with a new minimum monthly charge of RM41.50,' he said, adding that the shipping industry would be charged RM8.03 per cubic metre. Anuar added that the tariff revision is part of efforts to modernise Johor's water supply system and ensure it can meet rising demand from rapid development and population growth. The adjustment will also support key upgrading projects, including the second phase of the Layang 2 package with a capacity of 160 million litres per day (MLD), as well as Semanggar (50 MLD) and Semanggar 3 (120 MLD), he added.
New Straits Times
02-08-2025
- Business
- New Straits Times
Johor water tariff hike to fund system upgrades, most households unaffected
JOHOR BARU: The latest water tariff adjustment in Johor will not affect most domestic users, with Ranhill SAJ assuring that the move is critical to modernising and strengthening the state's water supply system. The new rates, gazetted following federal approval, came into force yesterday. Ranhill SAJ chief executive officer Anuar Abdul Ghani said the revision targets only high-usage domestic users (those consuming above 35 cubic metres per month) and non-domestic consumers, including industries, data centres and shipping. "The majority of Johor households – categories one and two – will continue to enjoy the old tariff," he said, adding that low-income e-Kasih groups and places of worship are also exempted. The minimum domestic charge remains at RM10.50, with a 35-sen increase per cubic metre for high-usage tiers. This minimum domestic charge also applies to households that use little to no water, including vacant homes. Bulk meter users in strata homes will see a 20-sen hike per cubic metre. Non-domestic tariffs are revised by RM1 to RM1.75 per cubic metre, while data centres and the shipping industry will now be charged RM5.33 and RM8.03, respectively. Anuar said the adjustment is necessary to replace ageing pipes, expand capacity, and support projects such as Layang 2 Phase 2 (160 million litres per day, MLD), Semanggar (50 MLD) and Semanggar 3 (120 MLD). "It's a needed investment for a secure water future in Johor," he said in a statement today.
