Hot Stock Puncak Niaga up 5% on water asset takeover

by **Cals** Thu 12 Jun 2014, 03:03

Hot Stock Puncak Niaga up 5% on water asset takeover

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Wednesday, 11 June 2014 15:12

KUALA LUMPUR (June 11): Puncak Niaga Holdings Bhd rose 4.8% after the water concessionaire agreed in principle to the Selangor government’s takeover offer for the former's 100% stake in Puncak Niaga (M) Sdn Bhd (PNSB) and 70% equity portion in Syarikat Bekalan Air Selangor Sdn Bhd for RM1.56 billion cash.

At 2.54pm, Puncak Niaga was traded at RM3.30, up 18 sen or 5.77% with some 7.2 million shares done.

Puncak Niaga accepted the offer via a letter last Friday to Selangor government investment arm Kumpulan Darul Ehsan Bhd. The buyer will assume associated assets and liabilities of PNSB and SYABAS. These exclude assets, liabilities and businesses under PNSB that are unrelated to the water business.

The takeover offer requires Puncak Niaga shareholders' approval. Puncak Niaga said its founder and executive chairman Tan Sri Rozali Ismail, who holds a 41.33% stake in the company, has expressed his intention to vote in favour of the takeover.

Today, RHB Research Institute Sdn Bhd upgraded its rating on Puncak Niaga shares to “trading buy” from “neutral”. RHB said in a note it had also raised its target price (TP) for the stock to RM4.01 from RM3.13.

“We expect a sharp re-rating in share price to reflect this positive development which, in our view, will pave the way for the disposal of Puncak’s water assets and operations,” said RHB.

For comparison, AmResearch Sdn Bhd wrote in a note today it had maintained its "hold" call on Puncak Niaga shares. This comes with an unchanged target price of RM3.40.

"We view the change positively, as it appears to clear uncertainties over SYABAS’ receivables owed by the state government (for delays in tariff hikes), and its payables to the water treatment players.

"We believe that a portion of the proceeds would be retained as the group (Puncak Niaga) is looking at acquiring assets for its oil & gas arm," AmResearch said.