KUALA LUMPUR (Oct 16):Puncak Niaga Holdings Bhd  saw its share prices rose as much as 3.48% or 10 sen to RM2.97 in early trades after the company had received RM1.6 billion on the sale of water assets to Air Selangor, prompting investors to expect a special dividend of RM1 per share.

The water treatment facilities operator opened high at RM2.92 this morning, and surged to RM2.97 in buying interest. At 10.30 am, the counter erased some gains, and was up 2 sen or 0.7% to RM2.89, with trading volume of 1.1 million shares.

Puncak Niaga announced yesterday that it had received the balance purchase price of total RM1.6 billion from Pengurusan Air Selangor Sdn Bhd (PASSB). This marked a major milestone in the state’s water restructuring exercise following seven years of impasse.

Accordingly, Permodalan Negeri PNSB and Syabas now belong to the Selangor state government. Puncak is also expected to deliver the cash dividend of RM534mil (or RM1 per share) to shareholders by year-end.

Analysts have mixed calls on Puncak Niaga following the sale of water assets.

AmResearch maintained “hold” with fair value of RM2.80, noted that the company’s next move will be crucial in other to fill the earnings gap following the sale of its water concessionaire businesses

For the 6M period, the oil & gas division posted losses of RM20 million while the water construction arm made a profit of RM2mil.

“Puncak has earmarked the remaining of the proceeds (RM1 billion) for either oil & gas or palm oil plantation ventures. With the proceeds in hand, we expect the group to actively seek out new opportunities in the coming months,” said AmResearch.

Yet the research house highlighted that positively, Puncak will not be considered as a cash company pursuant to Practice Note 16 of the Main Market Listing Requirements.

In contrast, CIMB Research maintained its “buy” call with target price of RM3.40, as it saw the special dividend as the next catalyst for the stock.

“With the cash in hand, the coast is now clear for Puncak to declare the dividend, which we believe is likely in Nov. We believe the cash payout could be realised as early as Dec-15 or in 1Q16., “ said CIMB, adding that the special dividend translates to an attractive 35% yield.

CIMB maintained its view that even if it considered the still-challenging outlook for Puncak's oil & gas prospects post the water asset divestment, and the clarity of the company’s domestic tender book for water jobs, Puncak's risk-reward profile in the short term remains attractive.

"Thus, the EPS forecasts are retained for now," it said.