PETALING JAYA: Taliworks Corp Bhd
’s potential involvement in phase two of the Sungai Rasau Water Supply Scheme over calendar year 2025 or 2026 will become a long-term catalyst for the group, say research firms.
That will help improve investor sentiment on the stock as its Rasau projects are currently facing delays in securing requisite approvals from the authorities, hampering the commencement of physical work.
It is believed progress should slowly pick up from the fourth quarter of 2023 (4Q23), on the assumption that requisite approvals from the authorities are secured by then.
Taliworks’ pipeline project in Bukit Jelutong, Shah Alam, known as Package 3, was recently granted extension of time whereby the bulk of financial recognition will now be pushed to financial year 2024 (FY24) and FY25.
Taliworks reported a revenue of RM89mil with a net profit of RM11.8mil or an earnings per share of 0.58 sen per share for 2Q23.
Revenue for Taliworks’ construction segment came in flat for 2Q23 ended June 30, 2023, mainly due to an over recognition of revenue for the Rasau projects in the corresponding quarter.
The average daily traffic at the Grand Saga Highway and Grand Sepadu tolled roads showed encouraging year-on-year growth of 8.4% and 2.9%, respectively, for the quarter, benefiting from increased car usage.
The average daily traffic growth on the Grand Saga Highway was partly attributed to the opening of the Sungai Besi-Ulu Kelang Elevated Expressway. However, its earnings growth was capped by higher amortisation costs.
Taliworks should expect contributions from this division to be weaker in FY23 due to expected lower compensation, which is only expected to be received in 3Q23 or 4Q23 with an estimated toll compensation of about RM8mil to RM9mil, according to RHB Research.
Taliworks’ water segment revenue climbed 14%, driven by the increase in the bulk water supply rate as well as higher electricity rebates, which offset the lower volume of metered sales for the Sungai Selangor Water Treatment Plant phase one operations.
Despite the gain on the sale of investment property helping to boost profit at the operational level, the greater maintenance and rehabilitation costs in the first half of 2023 had a similar offsetting effect.
Taliworks’ renewable energy segment also put in a better performance post-solar panel replacement at the SaTerm solar facility, bringing the total energy output up by 31% year-on-year to 5700 megawatt per hour for 2Q23. The Malaysia-based infrastructure company also declared a dividend per share of 1.65 sen for the quarter.
Taliworks’ financial results trailed expectations, RHB Research noted, with a core profit of RM22mil in the first half of 2023 (1H23) contributing 35% of the research house and street’s full-year projections.
Taliworks’ results missed Hong Leong Investment Bank (HLIB) Research expectations by 36% of the full-year forecast.
RHB Research cut its FY23, FY24 and FY25 earnings forecast for Taliworks by 12%, 4% and 3%, respectively, but maintained a “buy” call on the firm with a new target price (TP) of RM1.05 per share.
HLIB Research also cut the company’s FY23 and FY24 earnings forecast by 14.4% and 3.5% after cutting assumed construction progress. It maintained a “hold” call on the counter with a slightly lower TP of 82 sen per share post-earnings adjustments.
