KUALA LUMPUR (June 24): Puncak Niaga Holdings Bhd advanced as much as 6.4% after theedgemarkets.com reported earlier today, quoting a source, that a new supplementary water agreement is expected to be signed between the Selangor and federal governments tomorrow.

At 3.04 pm today, Puncak had pared some gains to trade at RM2.78, up 13 sen or 4.9%, making it the fourth top gainer after some 2.7 million shares changed hands. It had earlier hit a high of RM2.82.
 
The decision to draft out a supplementary water agreement comes after both the federal and state governments had agreed last month to end the water impasse in two months.

"Selangor exco will meet today and a decision will be made to pass the supplementary water agreement that will be signed tomorrow," theedgemarkets.com’s report had said.
 
The source added that this supplementary water agreement was drafted out after the master agreement had lapsed in March this year, over unresolved issues.

The master water agreement was signed by former Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim and Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili on Sept 14 last year.
 
But the master agreement had lapsed in March this year, after Selangor refused to grant its third extension on the master agreement.

Incidentally, Puncak (fundamental: 1.9; valuation: 2.1), which recently extended the disposal of its water assets to Pengurusan Air Selangor Sdn Bhd (Air Selangor) — the sixth extension to date — to July 13, 2015, had threatened last week to rescind its deal with Air Selangor, if the water impasse between the state government and federal government remained unresolved after Ramadhan.

Under the SPA, Puncak Niaga will dispose of its entire equity interest in Puncak Niaga (M) Sdn Bhd, together with a 70% stake in Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), to Air Selangor for RM1.55 billion, cash.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)