Publicly traded, state-owned enterprise Phnom Penh Water Supply Authority (PWSA) is preparing for expansion and will take on more debt to upgrade water treatment facilities and extend pipe connections, a move company representatives believe will drive share prices up.
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According to an official company statement released yesterday by the Cambodia Securities Exchange (CSX) – the national stock market – PWSA will increase its long-term debt to meet expansion needs driven by higher demand for water supply services in the kingdom.
Sim Sitha, the director general of PWSA, told Khmer Times a soft loan was granted by the French Development Agency (AFD) back in 2016, but that only now the utilities company is starting to make use of it.
“We received some $30 million in loans from the French government so we will use the funds to upgrade our Chamkamon water treatment plant from its current capacity of 560,000 cubic metres. We will add an extra 520,000 cubic metres due to an increase in demand and customers,” he said.
“The expansion will also impact our stock price,” Mr Sitha added.
Lamun Soleil, the director of marketing at CSX’s operations department, said that each company has a different optimal debt-to-equity ratio.
“If that ratio is less than optimal, increasing debt will be beneficial for the company because it will reduce financial costs,” he said, adding that whether increasing debt is a sound financial move depends on each company’s capital structure.
PWSA was the first company to list on the CSX by floating 15 percent of its shares in 2012.
The company’s revenue grew by 3.57 percent last year, reaching $49.5 million, while net profit fell by 13.5 percent to $12.3 million, according to the company’s 2016 annual report.
PWSA’s shares reached 3.880 riel at the CSX yesterday, climbing 1.57 percent from Wednesday.