Puncak Niaga’s fundamentals are seen as intact and analysts opined that its investors could enjoy huge yield of 40 per cent pursuant to the group’s water assets sale.
KUCHING: Puncak Niaga Holdings Bhd’s (Puncak Niaga) fundamentals are seen as intact and analysts opined that its investors could enjoy huge yield of 40 per cent as a result of the special dividend of RM1 per share share, fully diluted (fd), to the shareholders pursuant to the group’s water assets sale.
Kenanga Investment Bank Bhd (Kenanga Research) in a note said out of RM1.56 billion cash proceeds that are expected to be received by Puncak Niaga, RM534.3 million will be distributed to shareholders and the remaining RM1.02 billion to be kept for future investments.
“The special dividend is equivalent to RM1 per Puncak Niaga’s shares fd, way higher than our initial expectation of only 19 sen per share fd.
“Dividend payment of RM1 per shares implies a huge 40 per cent yield based on Puncak Niaga’s current price.
“Nonetheless, post-special dividend payout (estimated three to six months from now), we might consider reviewing our call and valuations with downward bias as we could not ascertain yet the group’s future direction after the sale of its water assets,” it commented.
Of note, Puncak Niaga had announced earlier that it has entered into a conditional sale and purchase agreement (SPA) with Pengurusan Air Selangor Bhd (PASB) for the proposed disposal of the entire equity interest held in PNSB and 70 per cent equity interest and redeemable convertible unsecured loan stocks (RCULS) held in SYABAS for a total cash consideration of RM1.56 billion.
Barring any unforeseen circumstances, the proposed disposals are expected to be completed in 1Q15.
Aside from that, in terms of share price performance, despite all the positives, Kenanga Research noted that Puncak Niaga’s share price is still trading below its disposal price tag of RM2.89 per share.
“We believe this is mainly due to the recent removal of the stock’s syariah-compliant status,” it said.