PUNCAK (6807) : Puncak Niaga top pick in water sector: CIMB Research
KUALA LUMPUR: CIMB Equities Research is retaining its Add recommendation for Puncak Niaga and target price of RM4.28 as the company is close to realising the Selangor state government’s RM1.6bil cash offer for both its water assets.
It said on Wednesday Puncak Niaga had formalised a sale and purchase agreement (SPA) for the divestment of its two water concessions.
The RM1.6bil cash offer by the Selangor state government is unchanged. The group has set aside RM534mil from the total proceeds to be distributed to shareholders as special dividends. The deal is expected to be completed in 60 days from the SPA.
“The valuation principles, including the terms and conditions of the state government's offer, are consistent with the earlier offer.
“A positive surprise was the generous RM1 a share in special dividends (fully diluted) versus our expectations of 20 sen to 30 sen a share,” it said.
CIMB Research said with a balance cash proceeds of RM1bil, this deal is also positive for Puncak Niaga as it would allow the group to pursue the expansion of its oil & gas business via M&As, domestically and overseas, and beyond the existing transport and installation (T&I) contract from Petronas.
“Surplus cash has also been earmarked for working capital needs of its water infra construction segment. Post-water asset divestment, Puncak's profit will feature mainly its domestic oil & gas venture and the construction segment. This excludes the proforma RM415mil gain from the disposal of the water assets,” it said.
CIMB Research advised investors to accumulate in view of the board-approved special dividends, which translate to an attractive dividend yield of 29% and likely to be realised in FY15 as the deal should be wrapped up in 1Q15.
“The share price has declined 8% from its 52-week high of RM3.71 in late-June as investors were generally concerned about the implications of the political change in Selangor and the potential delays in the water takeover deal,” it said.
http://www.thestar.com.my
KUALA LUMPUR: CIMB Equities Research is retaining its Add recommendation for Puncak Niaga and target price of RM4.28 as the company is close to realising the Selangor state government’s RM1.6bil cash offer for both its water assets.
It said on Wednesday Puncak Niaga had formalised a sale and purchase agreement (SPA) for the divestment of its two water concessions.
The RM1.6bil cash offer by the Selangor state government is unchanged. The group has set aside RM534mil from the total proceeds to be distributed to shareholders as special dividends. The deal is expected to be completed in 60 days from the SPA.
“The valuation principles, including the terms and conditions of the state government's offer, are consistent with the earlier offer.
“A positive surprise was the generous RM1 a share in special dividends (fully diluted) versus our expectations of 20 sen to 30 sen a share,” it said.
CIMB Research said with a balance cash proceeds of RM1bil, this deal is also positive for Puncak Niaga as it would allow the group to pursue the expansion of its oil & gas business via M&As, domestically and overseas, and beyond the existing transport and installation (T&I) contract from Petronas.
“Surplus cash has also been earmarked for working capital needs of its water infra construction segment. Post-water asset divestment, Puncak's profit will feature mainly its domestic oil & gas venture and the construction segment. This excludes the proforma RM415mil gain from the disposal of the water assets,” it said.
CIMB Research advised investors to accumulate in view of the board-approved special dividends, which translate to an attractive dividend yield of 29% and likely to be realised in FY15 as the deal should be wrapped up in 1Q15.
“The share price has declined 8% from its 52-week high of RM3.71 in late-June as investors were generally concerned about the implications of the political change in Selangor and the potential delays in the water takeover deal,” it said.
http://www.thestar.com.my
