Done deal for Puncak Niaga
KUCHING: The long-drawn-out water tussle between the Selangor State and Federal Government has concluded for Puncak Niaga Holdings Bhd (Puncak Niaga), analysts observe.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), the eight-year tussle for the water assets transfer in Selangor has finally been concluded – for Puncak Niaga and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) at least.
MIDF Research noted that four agreements were signed, namely Facilities Agreement, Lease Agreement, Settlement Agreement and Rights of Use Agreement by Pengurusan Air Selangor (Air Selangor) and Pengurusan Aset Air Bhd (PAAB).
“With these signings, the Master Agreement can be enforced and the sale and purchase agreement for Puncak Niaga’s assets to be taken over by PAAB will be executed.
“The transfers will take five months to complete,” it said.
The research arm has however noted that the battle is not yet over for Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) as the group’s shareholders were not agreeable to the offer price.
It further noted that a one-year grace period has been given to Splash to renegotiate the terms with the Selangor government.
On the transfer of assets, MIDF Research said that it will take five months.
The research arm noted that this is to facilitate the completion of all the conditions precedent which includes transfer of the Syabas, ABBAS and Puncak Niaga concession agreements.
“Air Selangor will only be given the Facilities License and Service License next year,” it added.
Although MIDF Research’s total percentage return exceeded its threshold level to warrant a ‘buy’ recommendation, the research arm made an exception by maintaining its ‘neutral’ stance on Puncak Niaga with a target price of RM3.16 per share.
The research arm was of the opinion that investors should remain invested to profit from the special dividend post completion of the water transfer exercise.
“However, the future of the company remains uncertain as its other core businesses are rather weak, especially its oil and gas segment which largely relies on its derrick lay barge,” MIDF Research said.