KUALA LUMPUR (March 11): CIMB Research has downgraded Puncak Niaga Holdings Bhd to “Hold” (from Add) at RM2.70 with a lower target price of RM2.71 (from RM3.75) after a statement by the Selangor Mentri Besar that Puncak's RM1.6 billion water asset sale was void due to the asset transfer issues between the state and federal governments caught the research house by surprise.
In a note March 10, CIMB Research said it was disappointed about this turn of events as Puncak's deal was the most advanced among all the concessionaires.
“We believe the RM1/share special dividend (37% yield) from the cash proceeds that was expected to be realised this year is now at risk due to likely delays.
“Puncak remains keen to exit its water business but its fate now rests on an amicable resolution between both sides of the government.
“We retain our EPS forecasts but cut our target price as we raise our SOP discount from 20% to 40%. Due to near-term uncertainties, we downgrade from Add to Hold,” it said.