CIMB Research maintains Neutral on Puncak

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KUALA LUMPUR: CIMB Equities Research is maintaining its Neutral recommendation on Puncak Niaga Holdings Bhd at a target price of RM1.42, which it still pegged to a 70% discount to its sum-of-parts.
It said on Monday, Sept 19 the outlook for Puncak remains anchored to the takeover of water assets in Selangor which shows no signs of progress.
It said the main takeaway from The Edge’s article on the potential takeover/privatisation of Indah Water Konsortium (WK) by 1MDB and Puncak is that Puncak is likely to be roped in to turn around IWK's operations.
“Our view is that the move is positive for the industry but may not be good timing for Puncak given the deadlock on the takeover of water assets in Selangor.
“A stake in IWK would be negative for Puncak’s earnings as IWK is loss-making. However, it would enhance its SOP value by 3%-4% based on the transaction value used when Ministry of Finance acquired IWK in 2000,” it said.