Hot stock Puncak Niaga falls 7.3% after Selangor water deals hit snag

Business & Markets 2013
Written by Zatil Husna of theedgemalaysia.com
Thursday, 05 December 2013 12:29
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KUALA LUMPUR (Dec 5): Puncak Niaga Holdings Bhd fell as much as 7.3%
today after a major Selangor water deal involving the company hit snag
yesterday.
Puncak Niaga said in a press statement yesterday the latest offer from
Kumpulan Darul Ehsan Bhd (KDEB) valued its assets at a lower price and it
was unhappy with several conditions imposed.
Yesterday Gamuda Bhd, which owns 40% stake in Syarikat Pengeluar Air
Sungai Selangor Sdn Bhd (Splash), rejected the latest offer saying that the
offer has excluded certain key components that effectively ascribe a lower
value to the assets.
At 11.42 am, Puncak Niaga was among the top losers. It fell 13 sen or 4% to
RM3.16 with some 3.79 million shares done, after hitting a low of RM3.05.
Falling in tandem was Puncak Niaga’s warrant. Puncak-WB, also among the
top losers, fell 9 sen or 4% to RM2.20 with trades of some 861,700 warrants.
In a note today, AmResearch said it has downgraded Puncak Niaga to “hold”
from “buy” with lower target price of RM3.40 from RM4.03.
“We are not surprised with the outcome due to the uncertainty surrounding
Pengurusan Aset Air Bhd’s (PAAB) commitment and payment of receivables
sought between the parties.
“We view that it is unlikely that the Selangor state government will agree to all
of the proposed terms by the water players but remained hopeful of a water
deal being hammered out by next year due to the urgency of the issue.”
But RHB Research is keeping its “buy” call on Puncak Niaga with an unchanged fair value of RM5.22, as it believes that Puncak Niaga,
the Selangor state and Federal governments will resolve the issue soon.
“We believe the major hurdle here is PAAB’s willingness to absorb the RM556.3 million shortfalls between Puncak Niaga’s water assets
and water-related borrowings.
“We still expect Puncak Niaga, the Selangor state government and the Federal Government will resolve their differences as soon as
possible to meet the deadline imposed by the Federal Government to conclude talks by the end of this year.
“In view of this, we remain hopeful that Selangor’s proposed consolidation of the state’s water assets would be completed sooner…
Maintain BUY on Puncak Niaga with our FV unchanged at RM5.22,” RHB said.