KUALA LUMPUR (Jan 8): Shares of Puncak Niaga Holsings Bhd (Puncak) rose 2.5% in morning trades on Thursday after its shareholders gave the green light for the disposal of the group’s assets and operations to the Selangor government at its extraordinary general meeting (EGM) yesterday.

At 9.32am, Puncak rose 7 sen to RM2.87 with 226,600 shares traded.

AmResearch analyst Max Koh said in a note today post disposal of assets and operations, the group’s future business plans were crucial in order to ensure sustained profitability.

“Note that Puncak may be classified as a cash company and trigger Practice Note 17 following the completion of the disposals,” he said.

Puncak had had entered into an agreement with the Selangor government to dispose its 100% and 70% stakes in Puncak Niaga Sdn Bhd (PNSB) and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) respectively to Pengurusan Aset Air Selangor Sdn Bhd (PASSB) for RM1.55 billion.

The agreement was inked under the Selangor government’s push to restructure the water services industry.

The disposal is expected to be completed by Jan 16.

Koh said Puncak will distribute RM534.3 million or RM1 per share on a fully-diluted basis from the proceeds as cash dividends to shareholders within three months.

He also noted that post disposal, the oil & gas business will be the main contributor to Puncak and with RM1 billion proceeds in hand, the group was looking to expand into either the oil & gas or oil palm plantation business.

He said as for current jobs in hand, Puncak has its water services-related construction jobs secured last year amounting to about RM544 million.

Koh also noted that Puncak is among four companies shortlisted for the RM800 million incinerator project in Kepong.

AmResearch has maintained its “hold” call on the stock until clarity is gained on the future plans of the company.

Koh's target price for the stock is RM2.80.