Hot Stocks Puncak, Perangsang fall as Selangor MB change looms

by **Cals** Wed 23 Jul 2014, 13:10

Hot Stocks Puncak, Perangsang fall as Selangor MB change looms

Business & Markets 2014

Written by Chong Jin Hun of theedgemalaysia.com

Wednesday, 23 July 2014 11:40

KUALA LUMPUR (July 23): Shares of Puncak Niaga Holdings Bhd and Kumpulan Perangsang Selangor Bhd (KPS) fell in anticipation of a likely change in the Selangor government leadership, seen as leading to certain revision in the water-sector restructuring terms.
At 11.15am, Puncak Niaga fell three sen or 0.9% to RM3.32 while KPS slid six sen or 4% to RM1.53. Gamuda Bhd, which traded flat, had earlier fallen as much as two sen or 0.4%.

The Edge Financial Daily reported today that the Selangor government would set to revise terms in the water consolidation exercise, should Datuk Seri Dr Wan Azizah Wan Ismail, the president of Parti Keadilan Rakyat (PKR), takes over as menteri besar from Tan Sri Abdul Khalid Ibrahim.

“When Kak Wan (Wan Azizah) comes in, the entire Selangor water restructuring deal will need to be relooked at, including the Langat 2 project that was signed in a hurry by the state government headed by Khalid,” said PKR Strategic Director Rafizi Ramli when contacted.

Fund managers said a change in the state government leadership could create uncertainties for Klang Valley water concessionaires.

The uncertainties include the possible repricing of the water asset takeover offer of RM9.65 billion by the Selangor government and disruption to the proposed RM3.6 billion Langat 2 water treatment plant project.

"A change in the Selangor menteri besar could create uncertainties (for the water sector)," a fund manager told theedgemalaysia.com over telephone today.

The Selangor government had earlier proposed to acquire four water concessionaires comprising Puncak Niaga Sdn Bhd (PNSB), Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Konsortium Abaas Sdn Bhd (Abaas), and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash).

PNSB, Syabas, and Abaas have accepted the offer but Splash has yet to agree to the proposed deal.

Analysts said Splash's acceptance was crucial for the Klang Valley water sector restructuring. AmResearch Sdn Bhd wrote in a recent note that a fair valuation for Splash was pivotal for the exercise to succeed.

According to AmResearch, Gamuda, which owns a 40% stake in Splash, had noted that the RM250.6 million offer was less than 10% of SPLASH’s net asset value of RM2.54 billion, leading to a potential divestment loss of RM920 million for Gamuda.

AmResearch said: "Recall that the state had previously said the privatisation of the other concessionaires will still go through and do not depend on Splash's acceptance. We opine that Splash's acceptance is still needed for an ultimate closure of the water saga.

"A fair valuation for Splash is still key to push the water impasse to a final resolution," AmResearch said.