SHAH ALAM: Puncak Niaga Holdings Bhd (PNHB) is eyeing Asean countries as potential markets to expand its water and environment engineering business, which will remain its core business after the disposal of its water assets to the Selangor government.
At the same time, the group is looking at diversifying into the plantation sector while upping its investment in the oil and gas business.
Puncak Niaga executive chairman Tan Sri Rozali Ismail told reporters this after the group’s extraordinary general meeting (EGM) here yesterday.
The group is in talks with several Asean countries to provide a “total water solution” in water treatment and distribution in the countries, said Rozali.
In the EGM, shareholders passed two resolutions to dispose of 100% and 70% stakes in Puncak Niaga Sdn Bhd (PNSB) and Syarikat Bekalan Air Selangor (Syabas) respectively to Pengurusan Air Selangor Sdn Bhd (Air Selangor) for RM1.56 billion cash.
A bumper dividend of about RM1 per share, or RM534 million from the cash proceeds, will be distributed to shareholders after the deals are completed.
The group ended the trading day at RM2.80 yesterday, which means the bumper dividend would translate into a 35.7% yield on each Puncak Niaga share.
Rozali said the shareholders’ approval is one of the conditions in the sales and purchase agreement signed between PNHB and Air Selangor in November 2014. The deal is expected to be completed on Jan 16, provided both parties fulfil the conditions in the agreement.
This would pave the way for the consolidation of water assets by the Selangor state government that begun six years ago.
Speaking on the group’s plan in 2015, Rozali said the group will continue to focus on its existing businesses, such as oil and gas services, while looking at buying plantation land in Malaysia.
He said the group has RM190 million worth of land bank to be developed into plantation, and some plantation land in Sabah and Sarawak have been identified for consideration.
He also sees oil and gas investment, which accounted for 30% to 40% of the group’s revenue, growing some 5% to 10% this year, an estimate he considered as “conservative”.
Rozali said the group still has two years’ worth of contracts with Petronas Carigali Sdn Bhd, a unit of Petroliam Nasional Bhd, with no indication that the 15% to 20% capital reduction this year by the country’s national oil company would impact the contracts. He said in the first year of the contract, the value was RM500 million.
He added the group is in talks with other countries such as Latin American nations and China for oil and gas investment, which will hopefully materialise this year.
Rozali said the group will not fall into the Practice Note 17 status after disposal of its core business.
He said Puncak Niaga will undergo a restructuring once the disposal is complete, adding that no employees will have their service terminated as those involved in the water concession will be transferred to Kumpulan Darul Ehsan Bhd, owner of Air Selangor.
This article first appeared in The Edge Financial Daily, on January 8, 2015.