By Khairul Khalid
Puncak Niaga will be distributing RM534 million cash dividends from the proceeds of its RM1.55 billion sale to the Selangor government.
The dividends are expected to be disbursed within the next three months.
“Puncak intends to utilise RM1.02 billion from the proceeds for future investments, which may include expansion into the oil & gas businesses and other ventures,” said an AmResearch report.
Yesterday, it was announced that Pengurusan Air Selangor has fully acquired two of Selangor’s water concessionaires, Puncak Niaga Sdn Bhd (PNSB) and Syabas (Syarikat Bekalan Air Selangor) for RM1.55 billion, based on the offer by the state’s Kumpulan Darul Ehsan Bhd (KDEB) that Puncak had accepted in principle last June.
Puncak Niaga Holdings has a 100% equity in PNSB and 70% in Syabas.
Pengurusan Air Selangor is a special purpose vehicle created by the Selangor government to acquire all water concession companies in Selangor, Kuala Lumpur, and Putrajaya. Last September, the federal and state governments signed a master agreement on the water restructuring deal.
“The disposal consideration for PNSB represents a discount of between 14% and 25% to the indicative valuation of RM1.3 billion to RM1.5 billion, as determined by an independent valuer. Meanwhile, the Syabas disposal consideration is at a 65%-70% discount to the indicative valuation of RM648 million to RM740 million,” said AmResearch.
AmResearch also adds that the original costs of investment for PNSB and Syabas are RM421.7 million and RM40.9 million respectively, with Puncak expected to realise a net gain of RM414.5 million. Based on the current shares outstanding, the dividend payout would equate to RM1.29 per share or a yield of 37%.
The proposed disposal is expected to be finalised in the first quarter of 2015 (1Q15) and Puncak is expected to call for an extraordinary general meeting (EGM) soon.
“However post-disposal, Puncak may be classified as a cash company and trigger Practice Note 17 (PN 17) given that water treatment and supply is a core business for the group. Hence, we maintain our “hold” call on Puncak with a fair value (FV) of RM3.40, until we see further clarity on the group’s future business plans,” said AmResearch.
Other than expansion into oil & gas, Rozali Ismail, executive chairman of Puncak Niaga also mentioned previously that the company would be looking at the plantation business to diversify its non-water revenue stream.
Last April, Puncak Niaga also signed a RM97 million contract with the Sarawak government for upgrading the Sarikei water treatment plant, which is expected to be completed in October 2015.
The RM1.55 billion Selangor-Puncak deal means that the remaining water concessionaire in Selangor is Syarikat Pengeluar Air Selangor (Splash), which has yet to agree to a deal with the state.
At noon break today, Puncak shares were trading at RM3.62, up 17 sen.
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