Puncak Niaga

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vested

A generous 29% dividend yield

Puncak Niaga is close to realising the Selangor state government’s RM1.6bn cash offer for both its water assets.

Yesterday's conditional sale and purchase agreement (SPA) formalised the deal and the agreed valuations for PNSB and Syabas.

A positive surprise was the board-approved RM1/share special dividend spin-off to be distributed to shareholders next year: a 29% dividend yield.

The asset divestment is expected to be completed in two months and will leave Puncak with sufficient cash to execute its oil & gas expansion plans.

We retain our target price as our SOP has incorporated the offer price.

Maintain Add. Formalisation of the SPA and confirmation of special dividends are key potential re-rating catalysts.

Puncak remains our top pick in the water sector.

Source: CIMB

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not vested

AmResearch maintains Hold on Puncak Niaga

KUALA LUMPUR: AmResearch has maintained its Hold on Puncak Niaga with a fair value of RM3.40 a share, it said in a note on Wednesday.

Puncak Niaga has yesterday entered into a sale and purchase agreement to dispose of its 100% and 70% stakes in Puncak Niaga Sdn Bhd (PNSB) and Syabas, respectively, to Pengurusan Aset Air Selangor Sdn Bhd (PASSB) for RM1.55bil.

It said Puncak intends to distribute RM534.3mil from the proceeds as cash dividends to shareholders within three months. Based on the current shares outstanding, the payout translates to RM1.29/share, or a yield of 37%.

Puncak intends to utilise RM1.02bil from the proceeds for future investments which may include expansion into the oil & gas businesses and other ventures.

The inking of the agreement is much-welcomed following protracted talks between the various stakeholders to restructure the water supply business in the state for years.

"We advise shareholders to accumulate to enjoy the dividend windfall of RM1.29/share (or RM1/share based on the fully-diluted shares of 534.6mil). The EGM is expected to be called soon with the proposed disposal to be completed in 1Q15," it said.

However post-disposal, Puncak may be classified as a cash company and trigger Practice Note 17 given that water treatment and supply is a core business for the group.

"Hence, we maintain our Hold call on Puncak until we see further clarity on the group’s future business plans," it said.

Source: The Star

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Cashing out of the waters

Puncak's annualised 9M14 core net profit was broadly in-line at 94% of our full-year forecast, and 4% above consensus. Narrower operating losses
expected for oil & gas and progress billings for construction should support a better 4Q.

Puncak's appeal remains the completion of the SPA for its water assets in 1Q15, which should pave the way for the board-approved RM1/share special dividend, resulting in a whopping 30% dividend yield. Our EPS forecasts and SOP target price are intact (still pegged to a 20% discount).

Maintain Add. Completion of the water asset sale and the bumper cash payout are catalysts. Puncak remains our top sector pick.

9M14 broadly in line. Annualised 9M14 core net profit made up 94% of our full-year number and was 4% above consensus. The performance was broadly in-line as we expect 4Q to be stronger, considering the narrowing of the losses for oil & gas (RM3.6m operating losses in 9M14 vs RM10.6m losses in 9M13, and the RM7.5m EBIT just in 3Q14) and stronger billings from water infra jobs, backed by RM544m in the outstanding order book.

There were no surprises in the overall operating numbers. No dividends were declared, which was also expected.

Exiting the water business in Selangor
The recently-signed sale and purchase agreement (SPA) with Air Selangor marks the start of the process of Puncak exiting the water business in Selangor. Shareholders are the main beneficiaries of the RM1.6bn incoming cash proceeds as 34% of the amount is earmarked to be distributed as a special dividend.

It 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. The asset sale allows the group to exit the Selangor water concession business and be more focused on oil & gas and water infra construction. For oil & gas, the group targets to secure more engineering and
procurement-type contracts.

Generous 30% dividend yield post asset sale
The board-approved special dividend of RM1/share post water assets sale remains intact and translates to an attractive dividend yield of 30%. This
should be realised in FY15 as the deal should be wrapped up in 1Q15.

Source: CIMB

https://brokingrfs.cimb.com/ZKW147lWF6D ... fKcQY1.pdf

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vested

AmResearch maintains Hold on Puncak Niaga

KUALA LUMPUR: AmResearch is maintaining its Hold recommendation on Puncak Niaga Holdings Bhd with an unchanged sum-of-parts based fair value of RM3.40 a share.

It said on Friday that for the 9MFY14F period, Puncak’s revenue fell 7% on-year to RM792mil. It reported 3QFY14 core earnings of RM60.3mil (flattish on-quarter), bringing 9M earnings to RM166.7mil (-6.3% on-year).

“The results made up 67% of our previous estimate and 73% of consensus forecasts. We have cut our FY14F earnings by 11%,” said the research house.

The group’s pre-tax profit fell 16% on-year to RM200.7mil mainly due to lower contributions from the oil & gas and construction segments, higher finance costs, and provision on impairment loss on trade receivables.

Its water division reported a lower PBIT of RM315mil (- 14% on-year) mainly due to higher operating expenses and provision on impairment loss on trade receivables.

Positively, losses at its oil & gas division contracted to -RM3.6mil (vs. -RM10.6mil a year earlier) for the 9M period due to higher contributions from GOM Resources.

“Recall that works for its Pan Malaysia job had only commenced in April this year following a deferment by Petronas last year.

“Its construction division reported a PBIT of RM6mil (vs. a loss of RM1.5mil a year earlier) for the 9M period, due to contributions from new jobs it had secured this year (worth RM544mil),” it said.

AmResearch recall that the group had entered into a sales and purchase agreement earlier this month to dispose of its 100% and 70% stakes in Puncak Niaga Sdn Bhd (PNSB) and Syabas, respectively, to Pengurusan Aset Air Selangor Sdn Bhd (PASSB) for RM1.55bil.

Puncak is expected to distribute RM534.3mil (or RM1.29 a share based on current shares outstanding) from the proceeds as cash dividends to shareholders within three months. The EGM is expected to be called soon with the completion of the disposal by 1Q15.

“Post-disposal, Puncak may be classified as a cash company and trigger Practice Note 17. The group intends to utilise RM1.02bil from the proceeds for future investments which may include expansion into the oil & gas and plantation businesses.

“The group is also one of four shortlisted for the RM800mil incinerator job in Kepong. We maintain HOLD until we see further clarity on the group’s future business plans,” it said.

Source: The Star

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vested

Puncak Niaga rose 4% on expectation of special dividend payment

By Chen Shaua Fui

December 29, 2014

KUALA LUMPUR (Dec 29): Puncak Niaga Holdings Bhd (PNHB) ( Financial Dashboard) rose 4.1% or 10 sen to RM2.78 on expectation of a special dividend payment to shareholders in the near-term.

PNHB’s share price rose to a high of RM2.81 but gave up gains to settle at RM2.78 as at 12.12pm, with 774,700 units traded.

In a note today, Kenanga Research maintained its “overweight” recommendation on the water sector, premised mainly on expectation of a special dividend payment from PNHB, that will be distributed to investors in the near-term after six years of deadlock.

Kenanga said out of RM1.56 billion cash proceeds expected to be received by PNHB, RM534.3million would be distributed to shareholders and the remaining RM1.02 billion would be kept for future investments.

“The special dividend is equivalent to RM1.00/PNHB’s shares (fully diluted), way higher than our initial expectation of only 19 sen per share (fully diluted),” Kenanga said.

The research house added that dividend payment of RM1.00/shares implies a huge 40% yield based on PNHB’s current price.

Nonetheless, Kenanga might consider reviewing its call and valuations with a downward bias as it could not ascertain the group’s future direction after the sale of its water assets post-special dividend payout, estimated 3-6 months from now.

In terms of share price performance, despite all the positives, PNHB’s share price is still trading below its disposal price tag of RM2.89/share, it said.

“We believe this is mainly due to the recent removal of the stock’s shariah compliant status.

“Hence, we view this as an opportunity for investors to accumulate the stock as PNHB’s fundamentals remain intact and most importantly, investors could enjoy huge yield of 40% as a result of the special dividend of RM1.00/fd share to the shareholders pursuant to the group’s water assets sale,” it added.

Source: The Edge

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RHB Research maintains Trading Buy on Puncak Niaga

KUALA LUMPUR: RHB Research has maintained its Trading Buy on Puncak Niaga with a target price of RM4.01.

In a note on Wednesday, the group said Puncak's share price has recovered by some 25% over the past three weeks after having retraced from a high of RM3.71 in tandem with weakness in local equity market over the last two months.

"That said, we see potential for further upside as we do not discount the possibility of a further dividend windfall to better reward shareholders amidst current market volatility," it said.

It added that Puncak’s EGM to decide on the proposed disposal of its water assets and operations is set to be held later today.

"We continue to advise existing shareholders to vote for the proposal and walk away with total net proceeds of RM1.56bil. Management remains committed to announcing a special DPS of at least RM1," it said.

RHB said upon completion of the disposal, Puncak will be a pure oil and gas (O&G) play via its 100%-owned subsidiary in Puncak Oil & Gas SB, which owns a derrick lay barge.

"The group has secured Package B of the Pan Malaysia integrated offshore installation contract worth RM1.8bil over a three-year period from 2014 to 2016," it said.

Source: The Star

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Puncak Niaga looking to diversify into agriculture

SHAH ALAM: Puncak Niaga Holdings Bhd is looking at diversifying its business into the agriculture sector, following the disposal of its water assets to Kumpulan Darul Ehsan Bhd.

At the EGM on Wednesday, shareholders approved the disposal of Puncak Niaga's entire equity interest in Puncak Niaga (M) Sdn Bhd and its 70% equity interest in Syarikat Bekalan Air Selangor Sdn Bhd to KDEB for a total cash consideration of RM1.56bil.

Executive chairman Tan Sri Rozali Ismail said a portion of the proceeds will be used for future investments.

"We are also looking at the agriculture sector and are eyeing several oil palm estates within Malaysia," he told reporters at a briefing earlier today.

Post disposal, Puncak Niaga is left with its oil and gas unit Puncak Oil & Gas Sdn Bhd, which owns a derrick lay barge.

Rozali added that the group will continue to focus and expand its oil and gas business despite current surpressed oil prices.

"We still see the potential in the oil and gas industry. We are not in the exploration segment, but rather the maintenance and servicing segment so we are not directly affected," he said.

He expects to see a growth of between 5% to 10% growth in oil and gas revenue. The business currently makes up for about 30% to 40% of Puncak Niaga's revenue.

The group has secured Package B of the Pan Malaysia integrated offshore installation contract worth RM1.8bil over a three-year period from 2014 to 2016.

Rozali added that Puncak Niaga is also in talks with overseas parties for potential provision of services in the oil and gas industry.

Source: The Star

[winston]

not vested

Puncak Niaga eyes foreign jobs, in talks with several parties

SHAH ALAM: Puncak Niaga Holdings Bhd is in talks with parties overseas to provide maintenance services to the oil and gas (O&G) industries.

Executive chairman Tan Sri Rozali Ismail said that the group was in discussions with China and countries in Latin America and Asean, among others, for the services.

“Hopefully, it’ll materialise this year,” he said after the company’s EGM yesterday.

The company’s O&G business will become its main contributor, following the disposal of its water assets and operations.

Yesterday, shareholders of Puncak Niaga finally put an end to the water saga when they approved the proposed disposal of the group’s water assets and operations to the Selangor government.

In November last year, Puncak Niaga signed a sale and purchase agreement to sell its 100% stake in Puncak Niaga Sdn Bhd and 70% stake in Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) to Selangor government-owned Kumpulan Darul Ehsan Bhd for a total of RM1.56bil.

RHB Research said in a note yesterday that Rozali, Puncak Niaga’s single largest shareholder, had given his undertaking to support the disposals.

The company had also proposed to pay a special dividend of RM1 each amounting to a maximum distribution of RM534.3mil which, Rozali said, the shareholders were happy with.

If both parties comply with the other terms and requirements as per the agreement, the disposals should be completed by Jan 16, 2015. The company will use part of the proceeds for future investments.

Post-disposal, Rozali said the company would still be involved in the water business.

“We have a track record in the water, waste water and also environmental engineering business. So we will focus on this for our future business. Currently, we are doing a lot of water business for the Government, private sector as well as overseas,” he said.

He added that Puncak Niaga was in talks with several countries in Asean to provide water treatment and distribution solutions in those countries.

On the O&G business, Rozali said although oil prices were not doing too well, the group saw potential in the industry.

Also, because it is not in the exploration segment of the industry, Puncak Niaga is not too concerned about the fall in oil prices.

It has secured Package B of the Pan Malaysia integrated offshore installation contract worth some RM1.8bil over a three-year period from 2014 to 2016.

Rozali expects the O&G business, which currently contributes some 30% to 40% to Puncak Niaga’s revenue, to grow by 5% to 10%.

Meanwhile, the group is looking to diversify into the plantation sector and is currently eyeing some oil palm estates.

“We have already identified a few (estates), but now it is just looking at the valuation and the profit forecasts and also the price of investment, if it is reasonable or not,” he said.

Puncak Niaga shares were down 13 sen to RM2.80 yesterday, with 2.4 million shares changing hands.

RHB Research maintains a “trading buy” on the stock, with a target price of RM4.01. “The share price has recovered by some 25% over the past three weeks after having retraced from a high of RM3.71 in tandem with the weakness in the local equity market over the last two months,” it said.

It added that there was potential for future upside, as it did not discount the possibility of a further dividend windfall to reward shareholders.

Source: The Star

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Bumper dividend from Puncak?

By: GURMEET KAUR

Source: The Star

http://www.thestar.com.my/Business/Busi ... ?style=biz