Puncak, KPS rise on fresh hope in assets consolidation

  • Business
  • Tuesday, 22 Jun 2010

PETALING JAYA: Renewed hopes for an amicable solution in the plan to consolidate water assets in Selangor gave a boost to shares in concessionaires Puncak Niaga Bhd and Kumpulan Perangsang Selangor Bhd (KPS).

While the market took in a news report that said parties involved in Selangor water supply are close to agreeing on pricing issues as a positive development for the sector, analysts cautioned that as it is, nothing had been finalised.

“Given that the bargaining leverage of various water entities in Selangor remains evolving, we are inclined to maintain our ‘neutral’ weighting,” AmResearch said yesterday.

It added that any resolution of the issue, however, would “unlock the deep embedded value” of Puncak Niaga, while any successful attempt by the state government to consolidate water assets in Selangor would be positive for KPS.

Yesterday, shares in Puncak Niaga shot up 15 sen, or 5.8%, to a four-month high of RM2.75 on volume of 1.6 million shares. Selangor state controlled KPS jumped five sen, or 3.8%, to RM1.37 with 1.15 million shares transacted.

The news report, quoting unnamed sources, suggested that Federal Government-owned Pengurusan Aset Air Bhd (PAAB) would pay for the water assets at book price.

Meanwhile, the Selangor government would get a stake in the operation and maintenance (O&M) side of the water supply business based on the amount it paid to top up the full amount in the agreed takeover price.

“While it is unclear if the water concessionaires such as Puncak Niaga would end up with a stake in O&M, we believe the latest development is positive, as it appears that the government will acquire the water assets at higher prices,” RHB Research Institute said yesterday.

Given that the offer price for the assets remained unknown, coupled with unresolved O&M ownership issues, the house opined that the water sector restructuring in Selangor would probably remain a long-drawn issue.

Given the lack of clear details to date, Kenanga Research said yesterday that it was unable to gauge the post-structure of the consolidation exercise and its impact on Puncak Niaga and other water operators.

“We expect the consolidation to be finalised by this year due to the ongoing legal issues among water operators coupled with negative outlook for water bonds by rating agencies,” it said.

  PUNCAK :  [Stock Watch]  [News]  KPS :  [Stock Watch]  [News]For latest Bursa Malaysia indices, charts and other information click here

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Related Stories: Puncak, AKN reprimanded Water firms placed on ‘MARCWatch negative’ Puncak Niaga posts slightly lower Q1 profit

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