#Hot Stock* Puncak, Kumpulan Perangsang rise on imminent water sector deal

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KUALA LUMPUR (Sept 4): Water related stocks Puncak Niaga Holdings Bhd and Kumpulan Perangsang Selangor Bhd (KPS) rose on news the Klang Valley water sector restructuring may be finalised next week.

At 12.30pm, Puncak Niaga rose three sen or 1% to RM3.41 while KPS added three sen or 1.7% to RM1.82.

Gamuda Bhd, which earlier climbed as much as two sen or 0.4% to RM4.84, settled lower at RM4.81.

Yesterday, Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim said the water restructuring exercise, which would see the state government take over the four water concessionaires operating in the state, would be finalised next week at the latest.

Abdul Khalid said Syarikat Pengeluar Air Selangor Holdings Bhd (Splash), which had earlier rejected the state’s buyout offer, would also come under state control.

Selangor signed a memorandum of understanding with the federal government in February for the state to take over the four concessionaires — Splash, Syarikat Bekalan Air Selangor Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB) and Konsortium Abbas Sdn Bhd (Abbas) for RM9.65 billion.

As part of the deal, the state government will issue the development order for the Langat 2 water treatment plant and the transmission pipeline. Syabas, PNSB and Abbas have accepted the state’s buyout offer, while Splash has rejected it.

Abdul Khalid said Splash's rejection would be resolved by invoking the Water Services Industry Act 2006 (Wasia) as agreed by the state and Putrajaya. Section 114 of Wasia provides for the state to forcibly take over Splash.

Today, analysts said a fair valuation for Splash was crucial to encourage the firm's shareholders to accept the Selangor government's offer.

Splash shareholders comprise Gamuda, which owns 40% of the water concessionaire, besides The Sweet Water Alliance, and Selangor government investment arm Kumpulan Darul Ehsan Bhd, which hold 30% each in Splash.

AmResearch Sdn Bhd analyst Max Koh said bulk water supply rates for Splash might also be looked into.

"We opined that a fair valuation for SPLASH is still needed for a meaningful closure to the water saga. We understand that a possible revision in bulk water supply rates may help result in an acceptance by Splash," Koh said.