Puncak Niaga climbs on resolution to water issue

KUALA LUMPUR: Puncak Niaga Holdings’ share price rose to a high of RM3.43 on Thursday on news the federal and state governments agreed to the National Water Services Commission managing the four water concessionaires in Selangor.

At 11.18am, Puncak was up four sen to RM3.39. There were 629,100 shares done at prices ranging from RM3.36 to RM3.43.

The FBM KLCI rose 0.38 of a point to 1,831.68. Turnover was 792.38 million shares valued at RM541.49mil. There were 283 gainers, 329 losers and 280 counters unchanged.

Affin Investment Bank Research said local media reported that the federal and state governments had agreed to invoke Section 114 of the Water Services Industry Act 2006 to take over the management of four water concessionaires in Selangor after negotiations fell through.

The takeover, however, was subject to a few conditions set by the ministry, in particular, that two administrators be appointed by the National Water Services Commission to manage the water concessionaires.

However, Affin Research said the above newsflow was negative to Puncak Niaga and the other water players in Selangor.

“That said, we do not expect share price to undershoot its base case water asset valued at RM2.90 a share, based on Selangor State Government’s latest fifth offer,” it said.

To recap, total offer for the equity and water assets of the Group’s 100%-owned Puncak Niaga Sdn Bhd water treatment plants and 70%-interest in water distributor SYABAS amounts to RM5.6bil.

“This values the group’s asset at RM2.90 a share,” it said.