Hot Stocks Puncak, Gamuda fall on end of talks with Selangor govt

by **Cals** Sat 11 Jan 2014, 01:33

Hot Stocks Puncak, Gamuda fall on end of talks with Selangor govt

Business & Markets 2014

Written by Jonathan Gan at theedgemalaysia.com

Friday, 10 January 2014 15:25

KUALA LUMPUR (Jan 10): Shares and warrants of water concession owners Puncak Niaga Holdings Bhd and Gamuda Bhd fell on news that the Selangor government has ceased talks with the companies to acquire their water assets in the state.

The cessation, in accordance with the Water Services Industry Act, follows the Selangor's government failure to finalise deals with the water players by December 31 last year.

At 12.30pm, Puncak fell six sen to RM3.35 while its warrants (Puncak-WB) declined nine sen to RM2.38.

Gamuda dropped two sen to RM4.51 while its warrants (Gamuda-WD) fell three sen to RM1.97

At 3.16pm, Puncak fell nine sen to RM3.32 while Gamuda declined three sen to RM4.50 at 3.17pm.

These stocks have fallen on comments by analysts such as from AmResearch that the latest development could deal a big blow to the industry players.

But there others who believe the cessation of talks between the Selangor government and water companies may be positive for the sector.

CIMB Investment Bank Bhd said it foresees this as helping to jump-start takeover renegotiations led by the federal government.

“Puncak may be able to get its proposed valuation top-up/compensation and Gamuda could get a valuation upside for 40%-owned Splash,” said CIMB analyst Sharizan Rosely.

That has prompted CIMB to recomended the accumulation of Puncak and Gamuda shares.

"Puncak and Gamuda are the direct beneficiaries as they will benefit from the positive expectations of a renegotiation of the takeover valuations.

"There could be a revival of Gamuda's special dividends story if it gets the right price," Sharizan said.