PETALING JAYA: Ranhill Utilities Bhd is expected to post bumper earnings for the financial year 2023 (FY23) on the back of full-year recognition of water tariff hikes and increased earnings contribution from its subsidiary, Ranhill Worley Sdn Bhd, say analysts.

The group’s latest first half FY23 core net profit of RM22.3mil, up by 30.6% year-on-year (y-o-y) came in within expectations, accounting for 54% and 46% of TA Research and consensus’ full-year forecasts respectively.

Ranhill Group is principally involved in both the environment and power sectors.

Under the environment segment, TA Research noted that demand for water as a cooling medium will likely grow in tandem, leading to robust earnings growth for Ranhill as Johor becomes the new focal point in data centres.

“We believe Ranhill is the frontrunner to win the tender for the Djuanda Source-to-Tap project in Indonesia, considering its vast experience in the field,” the research house said in a note to clients yesterday.

According to its management, the Ranhill-led consortium has submitted the feasibility studies to the authority and is currently waiting for the acceptance of the studies and the call for tender exercise.

As for the group’s energy segment, TA Research said the Sabah East-West Transmission line is expected to be completed in 2023, enabling up to 400 megawatt (MW) of additional electricity to be despatched from Sabah’s West Coast, where both Ranhill’s 190MW power plants are situated to the East Coast.

As oil and gas companies face intense and increasing demand to decarbonise their operations, the research house also expects Ranhill Worley to be the frontrunner to secure more engineering design contracts for carbon capture and storage projects.

Given the positive outlook for Ranhill, TA Research has maintained a “buy” call on the stock with an unchanged target price of 67 sen.