Taliwork - An Alternative to REIT Dividen

Company : Taliwork Corporation Berhad

Business : Utility sector covering water treatment, distribution, highway concessionaire (Grand Saga), waste management (Southern Waste) and engineering + construction. Most of the business are very stable except engineering and construction. The gem is in water treatment which is recession and COVID proof business.

  

Financial Information

There is no growth of CAGR-revenue. However, there is good CAGR of PAT. Profit margin is reasonable at 26%. Company has bank borrowings but manageable.

Borrowing	MYR (Million)	Cash or Cash Equivalent	MYR (Million)
Long term bank borrowing	328	Bank Deposit	48
Short Term bank borrowing	30	Investment (JV + Associate)	234
		Short Term Cash	264
Total	358		546

 

10 years revenue record

Revenue has been stagnant or declining as there no new business or project.

 

Revenue breakdown

Water treatment, supply and distribution is the biggest revenue contributor (71%). It is a very stable business. The demand of treated water will increase over time. Second biggest revenue contributor is highway concessionaire (approx. 23%). This sector has been hit by MCO lockdown but it will recover very soon.

 

Lates result at glance

 

YoY drop but QoQ increase. Profit margin improved significantly.

 

9 months revenue dropped because of expiration of Langkawi contract. See below.

 

Prospect

Growth opportunity

• RM602million Sg Rasau contract win will last them at least for 2 years.
• New solar assets
• Recovery of highway traffic.

 

 Risk

• Drought that leads to lower water treatment and distribution.
• Toll hike suspended

 

Dividen Chart

An attractive of 6 cents per annum is expected and pay every quarter. 75% payout ratio is really good.

 

Can the they sustain the dividen payout? Assuming they pay 1.65 sen every quarter then total dividen is 6.6 sen equiavalent to RM132 million. The cash flow of operation is sufficient to pay the dividen.

 

 

 Technical Analysis on Chart

The price is trading at the range of RM0.80 to RM0.90. It has been trending up due to recent award of Sg Rasau project. As you can see from the chart the price very stable and not much of fluctuation. Those seeking stable dividen with moderate long term capital gain can consider buying at low price.  

At time of writing, I don’t have any Taliwork shares. Follow my updates on other shares at FB 股海捞真。