Thursday 28 Mar 2024
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KUALA LUMPUR: Puncak Niaga Holdings Bhd saw a 4.35% jump in its share price after it announced the disposal of its water assets, in line with analysts’ recommendation that investors accumulate the stock based on its high-yield special dividends post-divestment.

Puncak Niaga shares closed up 15 sen at RM3.60 yesterday, with 5.12 million shares done. The counter saw an intraday high to RM3.74, placing itself among the top gainers on the exchange. Its warrant Puncak-WB was also among top gainers, adding 5.33% or 13 sen to end the day at RM2.57.

In an announcement on Tuesday, the group said it had signed a conditional sale and purchase agreement  with Pengurusan Air Selangor Sdn Bhd, a wholly-owned subsidiary of state investment arm Kumpulan Darul Ehsan Bhd. For RM1.55 billion in cash, Puncak Niaga has agreed to part with its wholly-owned subsidiary Puncak Niaga (M) Sdn Bhd  and the water treatment operator’s cumulative convertible redeemable preference shares; a 70% stake in loss-making water distributor Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), and its RM212 million nominal value of redeemable convertible unsecured loan stocks.

In response to the development, analysts have recommended investors to accumulate the stock, in view of the special dividends arising from the disposal. CIMB Research said the group has set aside RM534 million from the proceeds of the sale to be distributed as special dividends to shareholders, translating to a special dividend of RM1 per share. “A positive surprise was the generous RM1 per share in special dividends [fully diluted] versus our expectations of 20 sen to 30 sen per share,” it said in a note yesterday.

It  also noted that the balance of the proceeds of RM1 billion would allow the group to pursue the expansion of its oil and gas segment beyond its current transport and installation contract from Petroliam Nasional Bhd.

Similarly, AmResearch has advised shareholders to accumulate Puncak Niaga’s shares following the disposal. “We advise shareholders to accumulate to enjoy the dividend windfall of RM1.29 per share [or RM1 per share based on the fully-diluted shares of 534.6 million],” said AmResearch.

It also highlighted that Puncak Niaga may be classified as a cash company after the divestment of its water segment and trigger Practice Note 17 given that water treatment and supply is a core business for the group.

 

This article first appeared in The Edge Financial Daily, on November 13, 2014.

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