Latest news with #WaterSectorTransformationPlan2040


The Star
4 days ago
- Business
- The Star
Water rate hike to benefit companies in sector
CIMB Research said the tariff adjustments help negate a sharp rise in electricity costs and other water-related operating expenses for water treatment plant operators. PETALING JAYA: With an upcoming revision of water tariff rates, investors looking for exposure to water infrastructure-related stocks should look to the listed operators and the ones involved in water-related infrastructure construction, analysts say. The rate revision covers nearly all of Peninsular Malaysia and Labuan from Aug 1. CIMB Research said the immediate beneficiaries include Ranhill Utilities Bhd and PBA Holdings Bhd , being the only listed water operators on Bursa Malaysia. The research house has selected Gamuda Bhd as the preferred play for water-related infrastructure construction pending updates on the private sector's role in the country's water sector transformation. It noted that Gamuda 'is in a strong position to secure construction work worth RM4bil from the water supply schemes for Ulu Padas in Sabah, and Northern Perak', with work for the latter scheme to be carried out on a privatisation basis for a minimum of 40 years. Gamuda can be expected to be in the running for more jobs under the second phase of the Rasau water supply scheme in Terengganu after taking on the main contractor role for the scheme's water treatment plant worth RM2bil. For bulk water transfer, Engtex Group Bhd , one of only two domestic producers of large-diameter mild steel concrete-lined pipes up to 3m in diameter and the sole local producer of ductile iron pipes of up to 1.2m is well-positioned to meet future demand for large-diameter pipe infrastructure, the research house added. For flood mitigation, the research house suggests IJM Corp Bhd and Malaysian Resources Corp Bhd, with 'buy' recommendations and target prices of RM3.70 and 83 sen, respectively. 'In our view, the latest revision in water tariffs provides more room for the water operators to upgrade water infrastructure, accelerate the replacement of ageing pipes, and reduce non-revenue water. The tariff adjustments also help negate a sharp rise in electricity costs and other water-related operating expenses for water treatment plant operators,' it said. CIMB Research said despite the revision in the water tariff, funding from the private sector would still be required to help reduce the government's financial obligations to facilitate water-related investments required under the Water Sector Transformation Plan 2040.


The Sun
4 days ago
- Business
- The Sun
Water tariff revision boosts investment but private funding still needed
KUALA LUMPUR: Malaysia's water sector still requires alternative funding schemes involving the private sector to reduce the federal government's financial burden despite the ongoing review of water tariffs in selected states. CIMB Securities Sdn Bhd said the move is crucial to support the country's water demand, which is growing at an average rate of two per cent to six per cent per annum. It said there is also the urgent need to upgrade and rehabilitate aged water assets, including 98 out of the existing 350 water treatment plants (WTP) operating above their capacities and another 120 WTPs that are bogged down by operational issues. 'Thus, the latest revision in water tariffs provides more room for the water operators to upgrade water infrastructure, accelerate the replacement of ageing pipes, and reduce non-revenue water (NRW),' CIMB said. The research house also said that the latest water tariff adjustments mark another important step towards enhancing the quality of water services under Malaysia's Water Sector Transformation Plan 2040 (AIR 2040). 'Simultaneously, the tariff adjustments also helped negate a sharp rise in electricity costs and other water-related operating expenses for water treatment plant operators,' it said in a research note. It noted that the federal government has already provided a total of RM17.7 billion in funding assistance as part of the water industry restructuring between the 10 states and Putrajaya. The federal-backed Pengurusan Aset Air Bhd (PAAB), a Minister of Finance Inc's wholly owned company, remains the main funding conduit for Malaysia's water infrastructure projects, it said. However, CIMB stressed that PAAB has only replaced eight per cent of the 35,061 kilometres (km) of pipes under its ownership at a cost of RM2.1 billion since the initiative started in 2010. Furthermore, PAAB only controls about 26 per cent of water pipelines in the country, totalling 138,587 km, and 31 per cent of water infrastructure across Malaysia (excluding East Malaysia). 'To map out a holistic NRW programme, PAAB needs significant investments to meet the target of reducing the average NRW level in Peninsular Malaysia and Labuan to 28 per cent by 2030 (2023: 37.1 per cent),' it added. For exposure to water-related plays, CIMB Securities reiterated its view that licensed water operators under Suruhanjaya Perkhidmatan Air Negara would be the immediate beneficiaries of the water tariff revisions. 'Apart from Ranhill Utilities Bhd, PBA Holdings Bhd -- which owns Perbadanan Bekalan Air Pulau Pinang -- is the only other licensed water operator in the country that is listed on Bursa Malaysia. 'Pending further updates on the private sector's role in Malaysia's water sector transformation, we maintain Gamuda as our preferred play for water-related infrastructure construction,' it added. CIMB Securities said Gamuda is in a strong position to secure construction work worth RM4 billion from the Ulu Padas and Northern Perak water supply schemes -- works for the latter scheme will be carried out on a privatisation basis (minimum period: 40 years). For bulk water transfer, Engtex Group is one of only two domestic producers of large-diameter mild steel concrete-lined pipes, while for flood mitigation, Gamuda, IJM Corp and MRCB are strong in environmental-related projects. - Bernama


New Straits Times
5 days ago
- Business
- New Straits Times
Water tariff hike to boost infrastructure, offset rising costs
KUALA LUMPUR: The recent water tariff revision offers water operators greater flexibility to improve infrastructure, speed up the replacement of old pipes, and address non-revenue water (NRW) issues. CIMB Securities said the tariff adjustments also helped offset significant increases in electricity costs and other operational expenses faced by water treatment plant (WTP) operators. "For instance, the Negeri Sembilan government has seen the monthly water pumping expenses, especially for commercial and industrial sectors in the state, rising by RM700,000 since July 2024," it said in a note. The research house noted that several states have already detailed their plans for utilising the additional revenue from the revised water tariff structure. It added that the Penang Water Supply Corporation (PBAPP) anticipates generating an additional RM20 million in revenue in the second half of 2026 from the new tariffs, which it plans to reinvest in enhancing Penang's water supply infrastructure. "The projects in the pipeline include the construction of the Mengkuang Park Water Treatment Plant, the new Sg. Kerian WTP, and the construction of a new treated water pipeline from the Macallum area to Bukit Dumbar," it said. CIMB Securities said there is an urgent need to upgrade and rehabilitate ageing water infrastructure, noting that 98 out of 350 WTP nationwide are operating beyond their intended capacity, while another 120 WTP are grappling with operational issues. The firm emphasised that addressing these challenges is vital to securing the long-term sustainability of the country's water services. It also stated that the recent water tariff adjustments mark a significant step forward in enhancing water service quality under Malaysia's Water Sector Transformation Plan 2040 (AIR 2040). "This is crucial to support the country's water demand, which is growing at an average rate of 2 to 6 per cent per annum," it said. CIMB Securities noted that while water tariff increases are a step forward, the sector still needs alternative financing models involving private sector participation. This would help ease the federal government's financial burden in supporting the significant investments needed under the AIR 2040 plan. "For exposure to water-related plays, we reiterate our view that licensed water operators under Suruhanjaya Perkhidmatan Air Negara (SPAN) would be the immediate beneficiaries of the water tariff revisions. "Apart from Ranhill Utilities Bhd, PBA Holdings Bhd is the only other licensed water operator in the country that is listed on Bursa Malaysia. "Pending further updates on the private sector's role in Malaysia's water sector transformation, we maintain Gamuda Bhd as our preferred play for water-related infrastructure construction," it added. The firm said Gamuda is well-placed to win construction contracts valued at RM4 billion under the Ulu Padas and Northern Perak water supply projects. It noted that the Northern Perak scheme will be implemented through a privatisation model with a minimum concession period of 40 years. "As the main WTP contractor for Phase 1 of the Rasau Water Supply Scheme worth nearly RM2 billion, we also expect Gamuda to be in the running for more jobs under the second phase," CIMB Securities said.


New Straits Times
08-07-2025
- Business
- New Straits Times
Water tariff hike to boost construction sector, says CIMB
KUALA LUMPUR: Water-related infrastructure may bring additional opportunities for Malaysia's construction industry due to the potential water tariff revisions in the second half of 2025 (2H25), said CIMB Securities Research. The revised water tariff structures help ensure the financial sustainability of the water operators, with additional revenue streams being channelled to upgrade and refurbish water infrastructure systems such as water treatment plants (WTPs) and replacing old pipes. The firm is upbeat about a structural shift in water demand from special economic corridors and industrial zones, including the Johor-Singapore Special Economic Zone (JS-SEZ). "This is bolstered by the rising proliferation of data centre (DC) campuses and other upcoming industrial facilities in Johor," it said in a note. Downstream, CIMB Securities envisage spillover opportunities for contractors and pipe players if Suruhanjaya Perkhidmatan Air Negara's (SPAN) call for the DC industry to transition towards alternative water resources (e.g., treated effluent from sewage plants) is adopted. The firm said this entails the mapping out of waste treatment plants that can be connected with the new DCs. "Other water resource development projects that have been mooted to sustainably enhance raw water supply include the construction of off-river storage facilities or barges, rainwater harvesting, and using reclaimed water to power the DCs' cooling systems," it said. Meanwhile, CIMB Securities said it is equally optimistic about the potential implementation of alternative funding schemes involving the private sector. It believes this is an approach that could reduce the government's financial burden as it strives to facilitate substantial investments required by the country's Water Sector Transformation Plan 2040 (AIR 2040). "Through a competitive bidding process, private sector companies can play an active role alongside the government to resolve major water infrastructure issues plaguing the water sector, such as non-revenue water (NRW) loss," it said. Overall, CIMB Securities has maintained Gamuda Bhd as its preferred play for water-related infrastructure construction. The firm expects the Penang-Perak water transfer project to take off in 2026, providing RM4 billion worth of job prospects plus other potential opportunities such as renewable energy initiatives. "Having bagged the main contract to build Phase 1 of the Rasau Water Supply Scheme WTP, Gamuda is also gunning for similar types of work worth around RM300 million in Selangor," it added.