Puncak Niaga’s fundamentals intact: MIDF Research

by **Cals** Tue 18 Feb 2014, 07:22

Posted on 18 February 2014 - 05:38am

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PETALING JAYA (Feb 18, 2014): Puncak Niaga Holdings Bhd's fundamentals remain intact as analyst opined that the recent sell-down, which took place in January 2014 was unwarranted and as such buying opportunities still present itself, said MIDF Research.

In its previous reports, MIDF had indicated that even after the company ceases to be a water concessionaire, it will still be involved in water-related construction services and in the oil and gas industry.

In view of that, the research firm is maintaining its earnings forecasts at this juncture as the latest contract has been factored-in its future contract assumptions.

For FY14, it has attributed that around RM200 million worth of water or sewerage construction contracts to be recognised.
Last week, Puncak Niaga accepted a contract worth RM394 million from the Ministry of Energy, Green Technology and Water for the construction of sewer pipe networks.

MIDF is also maintaining its "buy" recommendation with an unchanged target price of RM4.04 a share.

The stock yesterday closed unchanged at RM3.27, with some 689,900 shares changing hands.

MIDF said the water asset transfer issue is still at an impasse at this juncture as the Federal Government has indicated that it will invoke section 114 of the Water Service Industry Act 2006 (WASIA).

It said this implies that there might be another round of negotiations, in particular regarding asset valuations.

There is also a chance that the water concessionaires will take this issue to arbitration court the next round of negotiations also are deadlocked on the takeover price.