The continuing Saga of Moya Holdings Asia Limited

You know I have been watching bits of the movie “The Big Short” on YouTube. In the movie, there is this character called Mark Baum. Mark Baum, this character is loosely based on an American businessman and investor called Steven Eisman.

There is one statement from him which kind of resonates with me (read here):

Do your own homework. I can’t overstate the importance of this. When things start to go bad, speaking to the management of the company may be the worst thing you can do. You can walk away thinking things are okay when in fact they’re not, because seeing outside your own paradigm is sometimes the hardest thing to do. In the big-bank industry from 1995 up until the crisis, every year was basically a good year. Every year, people got paid more, and every year the leverage got bigger. What happened is that the people who ran these firms mistook leverage for genius. If you had gone to one of the senior people in one of these firms in 2006 or 2007 or 2008 and said, “Dude, the entire assumptions by which you have governed your career are wrong,” they would have said, “Are you crazy? I made $50-million last year. How could I be wrong?”

Greed is a very powerful force. I see it in the cryptocurrency saga, the penny stocks run-up… etc.


People want to listen and read what they want to believe, especially if they have already committed money to it or have seen their investments soar. If it is doing great…. it shows that their belief is RIGHT, right? Eg. What do all those people out there know… did they make as much (in % terms), or more? If they are so right, why aren’t these people raking in the money and turbocharging their way to retirement (like me)? The one who makes the most money is right.

Actually, if you ask me, the most volatile factor/item in my portfolio is the (Stock) Price. The business of the company behind the price, management, vision, balance sheet, business environment, etc… or even my thesis for buying or selling the stock does not even come close (in changing). If I did not invest in stocks, my net worth every day would be about the same (except for the active income I rake in or the monthly expenses I incur – which are really very predictable). However, having stay invested for many years, this net worth figure becomes kinda volatile every single day. It is just mind-numbing (some days I am a ‘hero’, or other days I am a ‘zero’ financially).

Frankly, if I base my success or failure on this short-term net worth figure – I would have a huge headache. I rather have a good night rest.

  • Stock Market Investors Are Too Impatient (read here)

The rate at which people trade today is faster than any development ever seen. A recent article estimated that the average holding period for stock market investors in 2017 was just 22 seconds.


I don’t trade cryptocurrency nor do I trade penny stocks. In fact, given the choice, I rather watch YouTube videos than research on them (hence I’ve probably missed out on a lot of the run-ups). Oh, by the way, I do think there is a much deeper thesis behind the science of cryptocurrency…but it’s too complex for me.

In gist, I just think that a value system base on the monetary value of my stock portfolio is not for me.

Actually, I don’t really aim for the ‘super-fast profit’ kind of strategy, I aim for the ‘avoid bad companies and invest during the direst situations (whereby price is below intrinsic value)’ kind of strategy. :p Like how Howard Marks define ‘playing the loser’s game’ (read here). Just stay in the game.

I did a post about Moya Holdings Asia Limited some time back in Aug 2017 (read here).

To be frank, I probably won’t bother about this stock … except for the fact that someone asked me about it. There are a lot of penny stocks out there….most of the time, I have no idea what their business is about. Perhaps they want it that way in the first place.


The recent drop in its share price is not really unexpected. I can’t really forecast when it will drop… but I am not surprised. The stock dropped from SGD o.118 to SGD 0.1030 from 12 Oct 2017 to 16 Oct 2017. That is 12.7% decline in less than a week.


A quick search revealed that on 12 Oct 2017, the Indonesia’s Supreme Court ordered the government to restore public water services to residents in Jakarta after finding private companies “failed to protect” their right to water.

Foreign Private Companies in Indonesia’s Water Resources Management, such as Aetra (which is a subsidiary of Acuatico Pte. Ltd) – and now under Moya Holdings Asia Limited might be impacted if such ruling is realized.

  1. Indonesia’s Supreme Court Upholds Water Rights (read here)
  2. Indonesia’s Supreme Court Says No to Water Supply Privatization (read here)
  3. Moya Holdings Asia sees dismissal of lawsuit against latest acquisition
    (read here)
  4. Palyja analyzes water privatization termination (read here)
  5. Coalition opposing Jakarta water privatization wins appeal (read here)

Interestingly, in the 4th article above, it mentions that Private water operator PT PAM Lyonnaise Jaya (Palyja) respected the Supreme Court’s decision to terminate water privatization in the capital. And Palyja believed the court’s decision would provide legal certainty for investors in Indonesia.

FYI, Acuatico and Palyja, are the number one and two largest water firms in the country, respectively, by water volume produced.

Acuatico produces nearly 10,000 liters/second and caters to more than 2.8 million customers, some 90% of them in its concession area of East Jakarta. Palyja, an abbreviation of PT PAM Lyonnaise Jaya, is a close second in size to Acuatico, with about 8,500 liters per second, covering West Jakarta.  (read here)

I am not familiar with the government policies or judicial system in Indonesia, but this factor is worth noting.

This is kind of deja-vu for me, as many years ago I have invested in Golden Agri (still holding onto the shares).

Indonesian lawmakers have tried (and are probably still trying) to restrict foreign ownership of plantations to no more than 30 percent. Foreign plantation firms currently operating in Indonesia include Singapore-listed Golden Agri-Resources and Wilmar International, Malaysia’s Sime Darby Bhd and Cargill, and this law would definitely affect them and their shareholders. (read here)

In the case of Moya Holdings, I am content to just watch the development unfold from the sidelines.


The other thing that kind of piqued my interest is the valuation of Acuatico Pte Ltd via Moya’s reverse take-over of Acuatico in June 2017.

I am not familiar with the financials of Acuatico since it was only recently a private company. But let’s do a simple exercise of comparing it with the Chinese water plays such as China Everbright Water and Citic Envirotech.

It is like for anything if you do not know, the only way to judge is to compare. You don’t know if it is worth it, but in comparison, you know if it is ‘cheap’ or ‘expensive’ if you compare apple to apple. Flawed in essence.. but we do it all the time.

Let’s just ignore the balance sheet of Acuatico/Moya Holdings for the time being. We are aware of the valuation and FY 2016 pretax profit of Acuatico base on the acquisition announcement.

  • Salim Group acquires Aetra Air, Jakarta tap water operator (read here)


Let’s think in terms of pretax profit (which I know is not really very accurate as tax is not factored in and tax rates in Indonesia and China differ, moreover it is just one-year pretax profit). Well… that’s all I can work with, with the data given for Acuatico.

Let’s see the companies as purely money generating vehicles, and place a value on each.

The pretax profits of China Everbright and Citic Envirotech are approx. 2.7 times and 3.75 times the pretax profit of Acuatico respectively. However, the market cap. of China Everbright and Citic Envirotech are approx. 3.75 times and 5.1 times the valuation paid by Moya Holdings for Acautico. Much more than the respective proportions of the pretax profits.

The price/pretax profit ratios of China Everbright and Citic Envirotech are also higher than the price/pretax profit ratio of Acuatico.

Put it in another way, using a back of the envelope calculation, given the current ratios, if China Everbright made a pretax profit of US$25.76 million in FY2016, its market cap. would be US$344 million. And if Citic Envirotech made a pretax profit of US$25.76 million in FY2016, its market cap. would be US$333 million. While Acuatico that supposedly made pretax profit of US$25.76 million in FY2016 is valued at US$245.18 million. That is almost US$100 million cheaper than China Everbright’s ‘valuation’.


If we factor in debt since both China Everbright and Citic Envirotech also have debts (lots of it as well)… what do we get? Let’s face it – debt is a big factor in valuation.

Actually, leverage by itself if used properly can be great for a company. However, if the profits are low and the company essentially does not pay any dividend, I don’t see why people would want to invest in the company and hold it for years. It is not a bond that actually pays the investors interests anyway. It is just a ticking time bomb and debt kind of accelerate the whole process.


The top 2 tables show the net debt position of China Everbright and Citic Envirotech. Subsequently, the following 3 tables show the valuation of the companies after stripping away the debt from the valuation. The valuation of Acuatico excluding its debt becomes painfully low if we look at the price/pretax profit ratios (in comparison to China Everbright and Citic Envirotech).


Why is Acautico priced so cheap, at the current market rate? Is it because more than 1/2 of it consists of Acautico’s debt (62.1% to be exact).

Look there is no lack of analysts or reports stating how great Acuatico is or the huge market potential in Indonesia… I get it. But why so cheap?


I started the post with a video clip. Shall end it with another.

About apenquotes

Born in 1976. Married with 2 kids (a boy and a girl). A typical Singaporean living in a 4 room HDB flat. Check out my Facebook Page:
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